Dickey’s Barbecue Pit franchise owners are struggling for survival with stores closing across the country. Meanwhile, the Dickey’s franchisor DBRI has collected more than $50 million from struggling franchise owners in the past five years, but has refused to provide a full and detailed accounting. Dickey’s franchise owners ask: Where has all our marketing money gone? We ask: Shouldn’t owners be demanding answers?
(UnhappyFranchisee.Com) Dickey’s franchise owners, employees and customers continue to post the death notices of closed and closing Dickey’s franchise locations, dashed dreams and lost investments on our page DICKEY’S BARBECUE PIT Closed Location List.
In fact, the closings – and transfers of unviable stores to unwitting owners – are coming so fast, we can’t keep our list up-to-date.
Our DICKEY’S Franchise Graveyard page is a sad & growing art gallery of the Dickey’s closing and out-of-business signs, including those of an angry owner who plastered graphics from UnhappyFranchisee.Com across the door and front window of her once-promising restaurant.
We’ve been told that at Dickey’s headquarters in Dallas, new franchisee trainees are told they are not to stray off the carpet runners that guide them to their Barbecue University classroom. A sympathetic employee allegedly leaked the reason: The fifth floor is occupied by the Dickey’s oversized legal department & they don’t want new franchisees to learn of the continuous threats, bullying and legal lawsuits against established franchisees.
In this sad climate of desperation and fear, two supposed franchisee associations have formed to represent the interests of Dickey’s franchise owners: the Pit Owner’s Association (POA) and the Independent Barbecue Owner’s Association (IBOA).
The Pit Owner’s Association is being financed and seemingly controlled by the franchisor DBRI and seems to have all the fire and vehemence of a Shy Rights Activist (Shy Rights: Why Not Pretty Soon?). Not sure about the IBOA. Neither has had the good sense to contact Unhappy Franchisee (bad sign), the most outspoken advocate for Dickey’s franchise owners..
If a Dickey’s franchisee association is to have any credibility, the first questions they should be asking are:
“Where, exactly, is the $52,000,000 we paid into our separately maintained marketing fund in the past 5 years?”
“To whom was that money paid and what measurable results were gained?” and
“Why the hell should we continue paying 4% into a marketing fund when you refuse to provide a budget for the upcoming year and a detailed, audited accounting for prior years?”
In our opinion, franchisees should be asking hard questions about the use of their marketing dollars, and, if they don’t receive honest, detailed answers, demand control of their own local ad spending.
Questions Franchisee Associations Should be Asking About the Dickey’s Franchise Marketing Fund
If the POA or the IBOA expect franchisees to take them seriously, here are some questions they should be demanding answers to:
- How has Dickey’s Barbecue Restaurants, Inc. spent the $38,548,994 of its franchisee’s marketing dollars its collected in the past 3 years, and why won’t it provide a detailed accounting?
- How much of the nearly $40,000,000 collected went toward travel for Roland Dickey, Sr. and his companion, and for purchase of his cookbooks?
- How much was paid to “vendor” companies (real or fictitious) owned or controlled by Roland Dickey, Jr. and other family members?
- How much of the $40M was wasted on ill-conceived technology like Technology-in-a-Box, SpendGo loyalty, shifting online ordering or on developing technology products and services franchisees could then be charged for through fee-extraction entities like Roland Dickey-owned Spark Technology, Inc.?
- How much of the franchisee marketing money went toward the development of Dallas-area charities Maureen Dickey could personally take credit for (with no credit given to franchisees), like Barbecue Boots & Badges?
- How much of the $40,000,000 was spent on photo shoots of Roland Dickey, Jr. and public relations efforts whose primary purpose was franchisee recruitment, not consumer marketing?
- How much of the nearly $40 million was spent on such prohibited uses as payment of general DBRI administrative costs?
- Will franchisee marketing money be spent defending or settling the lawsuit alleging Dickey’s alleged QR code patent infringement?
- And why, with declining marketing fund revenue and increasing store closures, did DBRI increase its administrative cost 43% to more than $2 million?
If DBRI would provide the detailed accounting of the franchisees’ marketing fund, these questions and suspicions might be laid to rest.
Without it, franchise owners and DBRI employees are left to sift through Franchise Disclosure Documents and the leaked internal documents being passed around the Internet, searching for answers.
DBRI Increased Marketing Fund Administrative Expense 48% to $2M in 2017
Barry Posternak, a former CPA and health club franchisee who now owns Franchisee Resolution Consulting, analyzed the Dickey’s marketing fund numbers reported in recent company franchise disclosure documents.
His chart below shows that the marketing fund revenue actually declined from FY 2016 to FY 2017 (likely due to the high number of store closures and, possibly, due to fee exemptions extended to owners taking over troubled stores).
Yet despite declining revenue, DBRI appears to have charged over $2M in administrative costs to the fund.
Administrative fees jumped 43%, from 6.6% of the fund to 18% of the fund – a dollar increase of more than $1M.
DBRI is prohibited from using the franchisees’ marketing fund dollars for its own general operating costs or for franchisee recruitment.
Is the Marketing Fund being used to funnel compensation to family-owned “vendors”?
The refusal of Roland Dickey, Jr. and DBRI management to provide franchisees with a detailed accounting of their $40M in marketing funds has raised a great deal of suspicion about the use – and possible misuse – of the funds.
Our previous posts detailed allegations that Roland Dickey, Jr. and Roland Dickey, Sr. have used fake “vendor” corporations to secretly extract money from DBRI.
This prompts the question: How much of the franchisee’s money is being paid to companies (real or bogus) owned by Dickey’s family members.
Leaked marketing fund documents indicate significant payments from the fund to Spark Intelligence LLC, owned by Roland Dickey, Jr.
Franchisees are also charged individually to access sales reports through Spark Intelligence, Inc.
According to records provided by the Texas Secretary of State, Roland Dickey is Chairman and Director and Roland Dickey, Jr. is CEO and Director of Spark Intelligence, Inc., a Domestic For-Profit Corporation.
Is the Marketing Fund Providing Compensation & Travel to Roland Dickey, Sr. & Other Family Members?
A source alleges that the Dickey family has a propensity for charging personal travel and other expenses to DBRI.
Our source alleges that between 2010 and 2015:
- Roland Dickey, Jr. charged more than $2,000,000 in personal expenses to DBRI;
- Laura Rea Dickey incurred more than $225,000 in personal travel expenses
- Roland Dickey, Sr. (aka Mr. Dickey) incurred more than $400,000 in meals and entertainment and over $1,000,000 in travel expenses.
Franchisees, naturally, are curious as to how much (if any) of their marketing dollars are being spent on “consulting,” travel and meals by Dickey’s family members.
Leaked marketing fund documents show that in 2015, nearly $180,000 of their marketing dollars were spent on “Advertising – PR Mr. Dickey.”
In January of 2016, $15,000 was allocated for Mr. (Roland Sr.) Dickey travel and the purchase of $2,000 of his cookbooks.
One of the major reasons for transparency with the Dickey’s marketing fund is that DBRI seems to have a horrible track record when it comes to new technology and marketing programs.
It seems that it is enough for them to send out press releases about their supposedly cutting edge marketing and “big data” capabilities even when those programs never materialize or are utter failures.
Franchisees report that the Tech-in-a-Box and Spendgo loyalty programs are utter failures.
Franchisees complained of countless problems with online ordering and transitions between vendors. Did franchisee money go toward these projects?
The new Pit Owners Franchisee Association (which may or may not be a legit association) is demanding franchisee compensation for Spendgo, but how can they know how much franchisee money was spent on that program if Dickey’s won’t disclose how it spent franchisee money?
How Much Franchisee Money (If Any) Was Spent Developing Technology & IP Now Owned by Other Companies, Like Spark Intelligence?
A savvy franchisee association would demand a detailed ledger of marketing fund expenses for the past five years and look for signs that the marketing fund may have financed the development or refinement of programs for third-party vendors, like Roland Dickey-owned Spark Intelligence, Inc., yet did not receive any ownership or consideration for their investment.
Did franchisees pay consulting or development fees for marketing or technology products, only to be required to pay for them again in a monthly subscription?
Maybe, maybe not. But franchisees should know for sure.
How Much Franchisee Money is Spent on Roland Jr. Headshots? Franchisee Recruitment PR? Charity the Family Takes Credit For?
“The Marketing Fund shall be maintained in a separate account by Dickey’s or its designee and shall not be used to defray any of Dickey’s general operating
expenses… The Marketing Fund will not be used by Dickey’s for the targeted purpose of promoting franchise sales.”
We’ve seen leaked marketing fund ledgers showing photo shoots and related expenses for “Roland Dickey Jr.” headshots, which are widely, if not predominantly used for personal and DBRI promotion targeted toward a business and prospective franchisee, not a consumer, audience.
Websites like RolandDickeyJr.com are specifically focused to promote Roland’s business accomplishments and charitable activities that appear to have little to do with building lunchtime or dinner sales for franchise owners, or building the consumer brand.
Does DBRI or Roland Dickey, Jr. repay the franchisee marketing fund for these questionable expenses?
We’ve seen leaked marketing fund ledger entries indicating that the franchisee marketing fund paid invoiced to law firm Wesner, Coke & Clymer for legal expenses related to Maureen Dickey’s Barbecue, Boots and Badges Foundation. Yet the websites and press releases seem geared to highlight the Dickey family’s generosity, not the franchisees’.
Should franchisee funds be used to create a primarily Dallas-area charity designed to promote the Dickey’s family – not Dickey’s franchisees – as philanthropists?
How Much Was Spent & What Benefits Were Gained By The Middle & Baywatch Sweepstakes?
Were prizes ever even awarded?
What benefits were gained?
You do realize that franchise owners are struggling for survival and need marketing that raises sales, correct?
Why Not Reduce the Marketing Fund to 1% and Give Franchisees Local Control?
Franchise marketing funds are supposed to give franchisees a better bang by seizing opportunities made possible by pooling their resources.
For instance, instead of 100 franchisees paying a 100 designers to create a catering menu from scratch, a marketing fund can pay one designer to create one high quality design for all 100 franchisees to customize and print for 1/100th of the cost.
Instead of each franchise owner having to spend thousands of dollars to create a television ad, a marketing fund can be used to create a high quality commercial which can then be used by all who paid into the fund. For example, if 500 franchisees each contribute $100, they can each get unlimited use of a $50,000 television commercial for a tiny fraction of the cost.
However, the bulk of the Dickey’s franchisee marketing fund is spent in a way that seems to provide a diminished return and fails to use the benefit of pooled resources.
For every $20,000 (4% of a store doing $500K in annual sales) a franchisee pays into the marketing fund, $3600 (18%) is being spent on administration.
$12,600 (63%) is being spent on media placement, which may or may not include the franchisee’s market.
Any local media bought in the franchisee’s market is being placed by a stranger likely unfamiliar with the local media without the benefit of local relationships, barter, or discounts.
Wouldn’t it be more effective for DBRI to reduce the marketing fund to 1% for design and production of creative materials, and empower owners to spend 3% in their local markets as they see fit?
This would boost buying power by $2M right off the bat, as owners would be providing the time spent “administering” their own local advertising.
Franchisees would likely be able to better manage their local marketing, putting more resources toward marketing that provides clear and tangible boosts in traffic and sales.
And DBRI would be free of the (unsubstantiated, but strong) suspicion that they are using their struggling franchise owner’s marketing fund as their personal piggy bank.
Unfortunately, Franchisees Sometimes Only Get What They Demand
Many franchisors we’ve encountered over the years have the attitude that if franchisees are willing to act like sheep, they deserve to be sheared.
It’s a depressing viewpoint, but not an easy one to argue against some days.
Dickey’s franchise owners tell us that they were deceived and lied to, that they’re not being provided with the services they were promised, that they are bled dry then threatened, bullied and sued until they have lost everything.
We’ve seen a lot of evidence to back up what they say.
But where is the outrage at being denied a detailed accounting of the $50 million they contributed in the last 5 years?
Where is the insistence that if they are to pay 4% of their gross sales every week – an amount that can make the difference between loss and profitability – they have the right to verify that it is being used for its intended purpose.
Where is the insistence that DBRI either demonstrate that they are capable of using the franchisee’s money in an honest, transparent and effective manner or they eliminate the 4% marketing contribution until they can?
The sad truth is that most franchise owners don’t want to be the ones to rock the boat,
They don’t want to be the ones to expose themselves and take a stand.
They will suffer in silence, trade secret emails with other disgruntled owners, and wring their hands while their family’s finances and futures go down the drain.
So, perhaps DBRI and Roland Dickey, Jr. see the refusal to provide an accounting of the franchisees’ $50 million as a canary in their coal mine.
Perhaps Roland Dickey, Jr. figures that as long as Dickey’s franchisees don’t even have the stones to demand an accounting of their own $50M, DBRI and the Dickey family are pretty much free to do whatever they please.
About our information source: We believe the source of some of the information in this post is a credible inside source that has (or had at one time) access to the internal records and general ledger of DBRI for the relevant time period. However, it is possible that some or all of this information is flawed. We urge all interested parties to do their own investigation and let us know what they find. Also, we invite DBRI, Roland Dickey, Sr., Roland Dickey, Jr., Cullen Dickey, or their representatives to provide corrections, clarifications, and/or rebuttals for any information they deem untrue or misstated.
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