DICKEY’S BARBECUE PIT Franchise: Roland Dickey Sells to, Then Sues, Registered Sex Offender
President Roland Dickey, Jr. assigned the Dickey’s franchise for Johnson City, TN to an undercapitalized franchisee who had no foodservice experience and is a registered sex offender. Three months after opening, when the franchisee fell $1205.58 behind in his royalty and marketing fees, Dickey’s terminated the franchise and demanded $675,122.55 in liquidated damages.
(UnhappyFranchisee.Com) What was it that convinced Dickey’s Barbecue Pit President Roland Dickey, Jr. that James Neighbors was the right franchisee to operate his Johnson City, Tennessee restaurant?
Was it Neighbors’ complete lack of foodservice experience?
Was it Neighbor’s 2007 Chapter 7 bankruptcy filing, or his inability to finance the huge investment necessary to open a Dickey’s?
Was it the fact that Neighbors is a registered sex offender whose publicly available profile includes a classification of “violent”?
Did ace franchise salesman Jerrel Denton assure Roley that Neighbors passed their high level of scrutiny, since both the mirror fogged and the check cleared?
Or was it a combination of factors (inexperience, undercapitalization, violent criminal past, Jerrel Denton) that made Roland Dickey, Jr. say: Mr. Neighbors is the right franchisee to represent us in Johnson City!?
And how could anything go wrong with a screening process like that?
Roland in the Dough…
According to the lawsuit DICKEY’S BARBECUE PIT, INC. AND DICKEY’S BARBECUE RESTAURANTS, INC. v. JAMES L. NEIGHBORS filed July 28, 2014 in the United States District Court for the Eastern District of Texas, Sherman Division, Roland Dickey, Jr. and James Neighbors entered into a franchise agreement August 17, 2013.
We assume James Neighbors handed over a check for at least the $15,000 franchise fee at that point.
According to Dickey’s suit:
In his application for a franchise and during the franchise development talks, Neighbors failed to disclose to Dickey’s Restaurants that he had previously filed for bankruptcy and was a registered sex offender convicted of aggravated sexual assault. Neighbors’ failure to disclose his registered sex offender status coupled with his credit history, made it difficult to obtain financing for the franchise finish out. Neighbors complained about the inability to obtain financing and tried to ascribe the duty and inability to find financing upon Dickey’s Restaurants. In a letter dated May 22, 2014, Dickey’s Restaurants indicated that it had found a lender – although Dickey’s Restaurants had no obligation to find financing – but that Neighbors would have to have 90 days of franchise sales history before the lender would consider an application for financing.
The lawsuit exhibits include a checklist signed by Mr. Neighbors, but none of the questions asked about prior bankruptcies or felony convictions.
Apparently, Dickey’s franchise approval department has never heard of credit checks or even Google. Both Neighbors bankruptcy information and his Sex Offender Registration status are available with basic Internet searches. They DO have the InterWebs in Texas, right?
And while the suit states Dickey’s “had no obligation to find financing” for Neighbors, the franchisee has claimed that he never would have proceeded without Jerrel Denton’s representations that they could find him financing. (See DICKEY’S BBQ Is Dickey’s Overselling its Franchise Opportunity?)
Dickey’s Throws Franchisee into the Pit for $1205.58
Neighbor’s Dickey’s restaurant opened in Johnson City, TN on April 10, 2014.
According to a story in the Johnston City Press, James Neighbors went $200,000 in debt to open his Dickey’s Barbecue Pit restaurant.
A little more than 3 months after his Grand Opening, on July 17, 2014, Dickey’s Barbecue Pit, Inc. terminated Neighbor’s franchise agreement and ordered him to cease doing business.
The lawsuit alleges that the Dickey’s franchisor terminated Neighbors franchise for falling just $1205.58 behind in his royalty payments, and that he now owed $675,122.55 in liquidated damages.
The termination meant that he is ordered to immediately close the restaurant and not reopen it.
In fact, he’s forbidden from opening a barbecue restaurant within 5 miles.
So, James Neighbors’ decision to open a Dickey’s Barbecue Pit restaurant has left him nearly $1,000,000 in debt and under the crushing weight of a lawsuit he can’t afford to fight.
Dickey’s Barbecue: How to Lose $1M in 4 Months or Less!
Seriously, what does Roland Dickey, Jr. and Dickey’s Barbeque Pit hope to gain by suing James Neighbors?
Do they really think they do not look remarkably stupid and grossly incompetent when they claim that they didn’t check to see if their prospective franchisee had a recent bankruptcy or a criminal past?
Do they really think that they are going to obscure their parade of mistakes by further crushing a 54-year-old franchisee and his wife, both emotionally and financially?
In our opinion: They sold a franchise that shouldn’t have been sold to someone they shouldn’t have sold to… and instead of acknowledging their mistakes and trying to clean up their mess they go into attack mode and demand hundreds of thousands of dollars that Mr. Neighbors can never pay in his lifetime.
In our opinion, the moral of this story is… unless you need to to show a million dollar loss for tax purposes and don’t have years to do it, you should approach the Dickie’s Barbecue Pit franchise and the people selling it with extreme caution.
DICKEY’S BBQ Is Dickey’s Overselling its Franchise Opportunity?
DICKEY’S BARBECUE PIT Franchise Complaints
DICKEY’S BARBECUE PIT Makes an Unhappy Franchisee Happy
Read the lawsuit: DICKEY’S BARBECUE PIT, INC. AND DICKEY’S BARBECUE RESTAURANTS, INC. v. JAMES L. NEIGHBORS
ARE YOU FAMILIAR WITH THE DICKEY’S BARBECUE PIT FRANCHISE OPPORTUNITY? SHARE A COMMENT BELOW.
Tags: Dickey’s Barbecue Pit, Dickey’s Barbecue Pit franchise, Dickey’s franchise lawsuit, Dickey’s Barbecue Pit franchise complaints, Dickey’s Barbecue Pit franchisee lawsuit, Roland Dickey Jr., Roland Dickey, Dickey’s Barbecue Pit closed, Dickey’s complaints, Jerrel Denton, Dickey’s Jerrel Denton, James Neighbors, James Neighbors lawsuit, James Neighbors sex offender
12 thoughts on “DICKEY’S BARBECUE PIT Franchise: Roland Dickey Sells to, Then Sues, Registered Sex Offender”
I think everyone should see Mr. Neighbors in his own words then decide how much of this fiasco is his fault.
Manager no offense but it sounds like you claim to be gods gift to the restaurant industry, 20 years experience, you and your wife working a zillion hours, etc. Seems weird that a restaurant with such rock solid management would fail so quickly.
It also seems contradictory that you complain about Mr. Neighbors interfering with your management decisions but then complain that he was not there and when he was he was disengaged. Seems like you would be happy that he wasn’t around more.
Another strange thing is that you keep referring to your “moral compass” and your high ethics, yet here you are hiding behind a fake name and trying to hurt your ex-employer by dredging up embarrassing things from 30 years ago that don’t seem to be relevant whatsoever.
If you are so proud of your actions, why don’t you post under your REAL name? Mr. Neighbors does. I’m sure it will impress your next employer and your little league team.
I agree with (guest).. Seriously does the franchise and dickey Jr really think that james was in the wrong here? Maybe if they would have done there part by doing back ground checks they would not be in this mess. The way I see it is they are realizing they were in the wrong and are trying to make Mr neighbors look bad because they know they messed up on their end. Mr. Neighbors and his wife Nacny are great people they do not deserve to be going through what they are going through.
What does this stinking company call liquidation expenses adding up to and over $600,000? Are they in the business of simply closing down, reselling, closing down, reselling again the same franchises or do they sell food? This sounds as rotten as all those MMM company that let anybody become an Independant “consultant” as long as they buy the starter kit and so much a month. In reality the consultant can only make money by signing up other consultants who then sign up more consultants….infinity. Funny thing, all the vitamin, essential oil, wickless candles, miracle creams, companies are all based in Utah and Idaho because of the weak laws against pyramid schemes, and the Mormon buddy system. But that’s another fraud. Please explain how this bully club can sue someone who has lost all they own for another $600,000
There is a liquidated damages clause in the Dickey’s Barbecue Pit franchise agreement that, according to a couple of franchise attorneys I’ve spoken to, is pretty outrageous. It says that if a franchisee fails or does not open, he or she owes the company the equivalent of all the royalties they would have paid for the remainder of the 20-year term. So, in our understanding, this means that the moment you sign a Dickey’s franchise agreement you automatically are on the hook for about $600,000… in addition to the hundreds of thousands in expenditures required to open the restaurant in the first place.
So it would seem that Dickey’s could sell to franchisees without adequate funds and/or experience to make it successful, then they’d have this huge debt to hold over them. Many franchisors use such advantages to require the signing of “gag orders” prohibiting the franchisees from sharing their experiences.
Dickey’s officials or attorneys reading this, please correct me if I’m wrong.
I have seen the franchise agreement with the 20 year term, but I don’t think it has the $600,000 amount. The question for me was what kind of organization would present a franchisee agreement with a 20 year term that states you will be responsible for the royalties if you break it before the 20 years are up.
To me it’s an automatic bankrupt if you want to get out of the agreement at any time within 20 years. Even if you are successful for some years and then have a downturn.
Really, the term makes this agreement Dickey’s for life.
Did the lawyer think it was enforceable?
One lawyer said that it was not likely to be enforceable (in his opinion), but a franchisee will have to spend a lot of money in legal fees to get that ruling made.
His opinion (as was my suspicion) is that the clause is likely included In terrorem Latin for “into/about fear,” used as a club to hold over a failed franchisee’s head. We have seen numerous cases where franchisees must sign onerous non-disparagement agreements in order to get out of this situation. The agreements in essence keep them from sharing their experiences (ie warning others) about the worst-case scenario of franchise ownership.
It would be great if representatives of Dickey’s management or legal team could weigh in here and explain the need for such an extreme penalty (though they claim it’s not a penalty) for failure.
Dickey’s is not going to answer questions about the either contract provisions or business practices publicly or privately.
It’s clear that Dickey’s is apparently making illegal earnings claims to sell franchises.
They do not make an Item 19 earnings claim and that’s shameful with all the units they have to pull data from.
Well, they can’t say we don’t give them ample opportunity to provide corrections, rebuttals, or justifications for they way they do things. I email them each time I put up a new post giving them the opportunity.
No reply at all.
Dickey’s has dubious franchise sales practices. It works for Dickey’s and they are well beyond the point of no return. The way they sell is entrenched.
Dickey’s doesn’t believe they should have an Item 19 in their FDD and at the same time they seem to violate franchise sales compliance rules and make illegal claims anyway.
They are not going to answer for their business practices in an online forum. I doubt they will respond at all.
With the high turnover in franchise sales at Dickey’s it seems that if you don’t sell the way Roland wants you to you’re out.
So if that’s the case competent and compliant franchise sales legal compliance dies in the process.
Once a franchisor makes a decision to sell as many franchises as possible by any means legal or not it is next to impossible for them to stop themselves.
They are making a great deal of money from fees, royalties and rebates on the supply chain. It doesn’t matter if the franchise owners are profitable or not.
This kind of franchisor may or may not fail. Take Subway and Quizno’s both were reckless franchise sellers.
Subway had a tremendous amount of franchise unit failures and sold and resold failed units over and over. They eventually and despite the odds succeeded.
Quizno’s grew very rapidly and sold and resold franchise units that failed and they are a dead franchise brand that will limp along for years to come.
It’s cheaper for a franchisor who has made this choice to deal with franchise sales violations as they come (the FTC rarely takes this action) and defend against individual franchisee lawsuits and disputes.
There are no white knights that will run in and save the franchisees of a system engaged in this behaviour.