The Quiznos Master LLC (Denver), owner of the nation's second-largest sub sandwich chain, has put itself on the auction block. The family-controlled company, which as grown to 3500 locations and about $1.5 billion in annual sales in 25 years, is expected to fetch as much as $2 billion. It has hired Goldman Sachs to help it find buyers and study alternatives.
The chain has opened 800 restaurants in the last year alone, and says that franchisees have already signed agreements to open 1700 more.
Quiznos is controlled by Rick Schaden and his father, Dick Schaden, who bought the company in 1991. The Schaden family had been franchisees of the company, which was founded in Denver as a single-location restaurant in 1981. It was subsequently taken public and later taken private again by the Schadens.
The value of Quiznos became part of a family battle among the Schadens in the last several years, as the two Schadens were sued by their former wives, who contended that they were defrauded at the time the company went private and that their shares were valued at $8 million less than their true worth. Several other shareholders also sued, and a judge ruled against the Schadens, concluding that they acted in “bad faith” at the time of the deal. The cases were later settled for unknown amounts.
Several Quiznos franchisees have also sued the company, contending that it has allowed too many restaurants to be opened too near each other. And others have sued, contending that Quiznos overcharged for food and materials.