DICKEY’S BBQ Is Dickey’s Overselling its Franchise Opportunity?

Dickey’s Barbecue franchise owner claims he was misled into investing in the Dickey’s franchise, then left high and dry.  UnhappyFranchisee.Com questions Dickey’s franchise sales claims.

(UnhappyFranchisee.Com)  In an interview posted on the company website (Q&A with Dickey’s Director of Sales Jerrel Denton, Feb. 20, 2013) Dickey’s Director of Sales Jerrel Denton states that, since 2005, he has sold 114 franchise “units” for Dickey’s.

Mr. Denton states:

I’m motivated by the knowledge that if our new owners work hard in their business and follow our system, they will prosper and in about a year they will give me a call about starting their next location.

While Jerrel Denton’s belief in the Dickey’s franchise system may be admirable, is his promise to prospective Dickey’s franchisees that Hard Work + Procedural Compliance = Prosperity factually accurate?

According to our DICKEY’S BARBECUE PIT Franchise Complaints, “data released by the Small Business Administration (SBA) indicates that Dickey’s Barbecue Pit franchise owners who qualified for SBA-backed franchise loans have a very high loan failure rate of 36%.

“That qualifies Dickey’s Barbecue Pit for inclusion in UnhappyFranchisee.com’s list of WORST FRANCHISES IN AMERICA (by SBA loan defaults)

According to the company’s disclosure document, of the 114 Dickey’s franchises opened between 2008 and 2011, “60 Dickey’s franchises (30% of the total franchises opened) were either terminated or ceased operation during that same period.”

So, did the 30% or so of Dickey’s franchisees who failed to prosper* invest $115,000 to $400,000 to open a franchise, then refuse to work hard and/or follow the system?

Is Mr. Denton in compliance with franchise regulations in representing a 100% success rate for those who follow the Dickey’s system?

* While the numbers vary by FDD, the percentage of Dickey’s franchise agreements that result in terminations/reacquisitions/closures/transfers to new owners seems to range from 28% – 31%Source:  Dickey’s 2011, 2012, 2013 Franchise Disclosure Documents (FDDs)

Dickey’s Franchise Owner Claims He Was Misled & Deceived

UnhappyFranchisee.com has received a complaint from a franchise owner** who claims he was misled by Jerrel Denton and Dickey’s Barbecue.

He claims he was approved as a Dickey’s franchisee and promised financing.  He alleges that after he signed the Dickey’s franchise agreement, signed a property lease and invested an initial $60K, Dickey’s failed to provide the necessary and promised financing.

On January 22, 1014, James Neighbors wrote:

I am a new Dickey’s Franchisee, I was very excited to be a part of the Organization.

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I grew up eating Dickey’s Barbecue in Texas. We moved to another state and wanted to bring good barbecue to the area. Most Franchises have good and bad locations. I was sold on Dickeys because of their “promises”

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Let me tell you my story.

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Dickey's BBQI first inquired about Dickeys and spoke with Jerrel Denton their salesman. He told me they opened over 100 stores a year. No problems. Could be done with as little as 45k and could be open in 3 to 4 months. When I inquired about the financing he said anyone with my credit score (740) which I found out later was actually 640 would have no problem. He said they work with people with worse credit history than mine and specifically stated if we had the money we said we had we would have no problem getting our store open.

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On several at least 5 conversations with Him he reiterated the fact that they gave us full support and had a team of people to help with our financing and that we would not need a business plan because they had a standard plan they used with their finance companies and they pushed through so many loans they had no problem getting us financing.

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Keep in mind he was made aware of my credit history, personal history and cash etc. He stated this over and over making me feel comfortable about getting financing. I even asked him about getting financing first. He said no Dickeys does not do that. Their system works better and they have a whole team to work on our financing. On two phone conversations with two other Dickeys representatives One was in the finance department and Mr Denton I again asked about the Financing and was again told by the finance department and Denton that it was not necessary, no business plan needed etc.

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We moved forward,signed franchise agreement and was pushed very hurriedly into signing a lease (another disaster in the making) Giving specific instructions on what to buy and when to buy it I have now invested over $60k and need another $155k to get the restaurant opened. I have no financing at this time.

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I was told by the Dickeys finance department (that consist of 2 people to the best of my knowledge) that I was turned down 2 times. They submitted my application to a single company outside of the organization. Then the company required a business plan. I spent over 20 hours preparing one since I have never completed one before. Their explanation was they do not require one but some companies do and they use a standard Dickeys business plan which consisted of an outline that could have been obtained off the internet.

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I have since submitted my business plan and application to three banks that are sba lenders and 3 banks that are not sba lenders and have been turned down by all. Main reasons are:

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1) Lack of funds in personal accounts – i have spent it on following Dickeys plan to the letter.

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2) Low credit score and credit history – Dickeys was given this info up front before we signed and they stated just the opposite, there would be no problem.

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3) Restaurant Startups are too risky and I do not have the expereince – Dickeys has on several occasions told me you do not need experience we train you and our lenders like to see you involved. A lot of BS.

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Long Story Short…..I feel I was misled by someone that was acting like a used car salesman. I should have known better but I felt that the Dickeys name and the people were different, not just a bunch of wealthy, greedy corporate types. I must have been wrong.

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I am over $60k out of pocket and they tell me “You will have to find your own financing” with no job, no money in the bank, they now have pushed me into a corner. My only option is to use my Home and I am reluctant. I am in a binding lease and have purchased a sign, smoker, etc.

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Any one have any suggestions?

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Know a good Lawyer?

Is Dickey’s Barbecue overselling its franchise success rate and ability to secure financing?

** We haven’t verified these allegations and don’t know if they are accurate.  We are reaching out to Jerrel Denton and Dickey’s Barbecue for their side of the story.

Please share a comment (anonymous is fine) or Contact UnhappyFranchisee.com.

ARE YOU FAMILIAR WITH THE DICKEY’S BARBECUE PIT FRANCHISE OPPORTUNITY? ARE YOU A CURRENT OR FORMER DICKEY’S FRANCHISE OWNER? PLEASE SHARE A COMMENT BELOW.

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