September 2, 2010
Will having cycling legend Lance Armstrong on board as an organizer of the Quiznos Pro Challenge, a new seven-day Tour de France-style race that will take place in Colorado next August, boost the cost of this Denver-based sandwich chain’s franchises? Let’s hope so. Recently, aspiring restaurateurs have been able to get into a Quiznos store for a mere $5,000. It you’re looking for a low-budget way to own a restaurant, this could be it.
When Quiznos found out that plans for a big bike race were in the works, it couldn’t sign the sponsorship agreement fast enough.
"When we read that Lance and the governor were talking about bringing a race back to Colorado, we were the first ones at the door," Ellen Kramer, Quiznos chief communications officer, told the Denver Post. "We used every channel we possibly could to get at that first meeting to say, 'We want to be part of this.'” They are now, although Kramer doesn’t say how long the sponsorship agreement will last.
The size of Quiznos’ dollar commitment is unknown, too. But given the formidable and costly logistics of conducting a race that will meet the standards of the international pro teams the race hopes to attract, it’s probably a bundle.
The inaugural tour will take place Aug. 22-28, 2011. It’s the slot on the pro cycling calendar that this year was filled by the now-defunct Tour of Missouri. That event folded this year after $1 million in funding from Missouri’s tourism department dried up. The budget for the annual Tour of California, also a seven-stage race like the Quiznos Pro Challenge will be, is $12.5 million.
No matter what Quiznos pays out, the marketing return should be more than worth it. But Quiznos seems to have plenty of money to work with—at least if you’re buying a franchise. The chain has several different deals available, but one they’ve been hawking in seminars around the country this summer has an operator-friendly price tag. It requires only a $5,000 down payment on a lease-to-own deal. Pay it and you’ll earn a salary of $24,000 a year plus 20 percent of store profits until the full cost of opening the restaurant is paid off. Trust us, the cost of entry into the restaurant business doesn’t get much lower than this.
Another Quiznos franchise option features in-house financing, too. This one costs as little as $12,500 down, for which the owner gets the right to reopen an existing Quiznos unit that has recently shut down.
The company primarily extends these terms to people with restaurant management experience. The value of the in-house lending and company-funded microloan arrangements used to get these deals off the ground is that the recipient doesn’t have to qualify for a loan with a bank.
Should you go for it, especially now that Lance Armstrong is on board for marketing? Keep in mind that Small Business Administration figures show that the failure rate for Quiznos franchisees that take a SBA loan is 25 percent. The failure rate for competitor sandwich chain Subway is seven percent.
Quiznos has a good product and the company is an aggressive marketer. And certainly the Lance Armstrong connection is only going to help, even though Lance is endorsing the race, not Quiznos. But we advise fully reading and understanding all aspects of this chain’s (or any other chain’s) franchise agreement before you sign on the dotted line.
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