The United States District Court for the District of Colorado recently denied The Quizno’s Franchise Company LLC’s motion to dismiss claims brought by a class of Quizno’s franchisees under Colorado statutory and common law. Bonanno v. The Quizno’s Franchise Co. LLC, 2008 WL 638367 (D. Colo. March 5, 2008). Plaintiffs allege that Quizno’s, its affiliated entities, and individuals who control and operate the Quizno’s franchise system fraudulently induced plaintiffs to “purchase franchises for between $20,000 – $25,000 per franchise when they knew that the franchisees would never receive anything in return for their franchise fees.” The plaintiffs further allege that “Quizno’s took the franchise fee from more than 3,000 franchisees and has failed to provide a store for them.” In denying defendants’ motion to dismiss, the district court held that plaintiffs had standing to assert and sufficiently pleaded the following claims: (1) violation of the Colorado Consumer Protection Act; (2) fraudulent inducement; (3) breach of contract; (4) breach of implied covenant of good faith and fair dealing; (5) unjust enrichment; (6) economic duress; and (7) judgment declaring the Quizno’s Franchise Agreement unconscionable.
The Franchise Memorandum