The Franchise Memorandum

In a putative class action suit, Bonanno v. Quizno’s Franchise Co., LLC, 2009 WL 137211 (D. Colo. Jan. 20, 2009), the plaintiffs recently brought a motion to compel the franchisor’s chairman and ex-CEO to answer deposition questions concerning his personal financial gain from a 2006 transaction in which an affiliate of JP Morgan acquired 49% of Quizno’s stock. The plaintiffs argued that the testimony would show the motive behind and the fruits of “Quizno’s fraudulent scheme to turn its owners . . . into billionaires by selling the company after inflating its value by defrauding Quizno’s franchisees.” The court denied the plaintiffs’ motion. The information sought and its purpose, that is, the amount and specifics of the chairman’s personal financial gain to be used as evidence of motive and intent, was not relevant to any of the claims at issue since neither motive or intent was a required element of any of the plaintiffs’ claims, the court held. The court’s added that the plaintiffs failed to demonstrate a “compelling need” for this confidential, personal financial information because they failed to show that it was needed to prove an element of any of their claims.