3 Companies Franchisees Should Be Cautious Of

The company has just about 2,900 locations, primarily in the U.S., but also internationally. That's down significantly from the 5,100 locations the company boasted in 2006, a January Nation's Restaurant News article says.

According to a QSR Magazine story, the sandwich chain had embraced rapid expansion (and focused less on operations), which ultimately led to debt problems.

"Improving our balance sheet and putting our capital structure issues behind us are major steps forward to strengthening the Quiznos brand and our customer experience," Quizno's CEO Greg MacDonald said in the January announcement.

The $150 million cash injection from Avenue Capital will help the company launch a consumer marketing campaign, invest in system analytics and improve operations, it said in January.

The company is now working towards improving the brand, expanding selectively and eventually rolling out a new menu. It is also instilling several quick-service and fast-casual veterans as new additions to its board of directors. In February, industry veteran Harsha Agadi, who most recently served as the chairman and CEO at Friendly's Ice Cream, was named Quiznos' executive chairman.

By January 2013, Quiznos hopes to open 100 traditional outlets and 150 non-traditional locations, according to the QSR story.

The company is also building a new prototype store, with updated décor and lower build-out expenses. Its first one opened in Portland, Ore., according to Nation's Restaurant News.

Segreto says while the company has made progress, noting the January settlement, he suggests potential franchisees wait to see how the restructuring and reboot pans out before buying into the company.

Quiznos' new management and ownership team has positioned the company for long-term growth, CEO Greg MacDonald says, while the new equity capital will "continue to position Quiznos as an attractive franchise investment opportunity."

"Today's Quiznos is stronger than ever before and we are resolute in our focus of further building the Quiznos brand and customer experience," MacDonald said in a statement Thursday.

2. Curves
Woodway, Texas

Fitness club franchise, Curves , is another company that went through rapid expansion - until it began to oversaturate its markets.