On Aug. 26, a Los Angeles County judge told Quiznos Subs franchise it could not shut down a Long Beach, Calif. franchise chain and ordered Quiznos Subs into arbitration with Bhupineer "Bob" Baber and his wife Ratty Baber, who claimed that new sub franchises in their area siphoned customers from their two Long Beach fast food franchises. If the Babers win that round, Quiznos Subs franchise may not be able to open new sub franchises in cases where food sales are likely to cut into the business of existing Quizno franchises.

"There is an implied covenant of good faith and fair dealing that says you don't dump competition on top of your existing franchisees," said Fred Pardes, attorney for the Babers.

Quiznos' franchise agreements do not restrict the company from opening sub franchises within the proximity of existing locations.

But Don Boroian, a franchise consultant with Francorp, said franchisers like Quiznos have an obligation to prevent locations from encroaching on each other's territory.

Boroian is serving as an expert witness in a separate lawsuit against Quiznos in which the plaintiff, Royce Gwin, is arguing that he was denied commissions for selling franchises.

In 2004, Quiznos opened two fast food sub franchises less than two miles from the Babers' Quiznos. Pardes said that within months, the Babers' revenue fell by one third and blamed it on the new competition.

The Babers founded a not-for-profit last December to organize Quiznos franchisees with similar grievances. One month later, Quiznos Franchise revoked the Babers' franchise on the grounds of health code violations. The City of Long Beach said the chain passed all health code inspections.

But the closure prompted the Babers to sue Quiznos Franchise.

Quiznos would not comment on the allegations or the suit.

"We are moving forward with arbitration in California," wrote a Quiznos spokesperson in an e-mail. " We're not going to comment further regarding ongoing litigation."