Denver Quiznos is just starting to break free from its troubles, thanks to a debt restructuring program and equity capital injection the company announced in late January. The chain of sandwich shops, known for its toasted subs, suffered several years of declining sales, store closings, upset franchisees and accumulating debt, according to media reports. Quiznos had been trying to avoid bankruptcy by negotiating with its creditors, store landlords and others. The company ended up handing over majority ownership to hedge fund Avenue Capital Group in January. 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.
Woodway, Texas Fitness club franchise, Curves , is another company that went through rapid expansion - until it began to oversaturate its markets. The idea behind the company, a female-centric fitness club that also offers diet and nutrition programs was a fine one, but some franchisees say the company was more concerned about its growth plans than doing due diligence on potential franchisees and properly training existing ones. Curves has roughly 4,000 locations - a number cut in half from its peak in 2005, according to the The Wall Street Journal .
Scottsdale, Ariz. Litigation is what is plaguing Cold Stone Creamery , the premium ice cream chain bought by Kahala in 2007. According to the Cold Stone Creamery website, the company has 1,500 franchises in 20 countries. Doing a simple Google search on "Cold Stone Creamery" and "franchisees" pulled up the website, Unhappy Franchisee , which doesn't exactly paint Cold Stone or Kahala in a positive light. Like the other two companies on this list, Cold Stone was also subject to an extremely rapid expansion right before a downturn. Many franchisees have closed over the years due to high operations costs and a recession in which consumers tightened the purse strings. Add in the fro-yo craze and a general transition toward healthy eating and the growth prospects don't look as exciting for Cold Stone Creamery.