Dickey’s Barbecue Pit franchise owners in California have filed a class action lawsuit against Dickey’s Barbecue Restaurants, Inc. alleging Fraud, Violation of the California Investment Law, and Violation of Unfair Competition Laws.
Yesterday, California Dickey’s franchisees Amy Meadows, Dawn Toff, Donna Schiano and Alfred Pena, on behalf of themselves and other California franchisees similarly situated, filed a class action lawsuit in the United States District Court, Northern District of California.
The franchisees are represented by attorneys Vincent Bartolotta, Jr., Karen Frostrom, and Rebecca Blain Morrison of San Diego-based Thorsnes Bartolotta McGuire LLP.
For those who have been following the Dickey’s Franchise Complaints we’ve been posting on Unhappy Franchisee, the main allegations will not be new:
- That Dickey’s downplays the need for experience & provides inadequate training & support
- That Dickey’s grossly understates the initial investment to prospective franchisees,
- That Dickey’s makes deceptive earnings claims (“Each store would make at least $800,000 in the first year and it would only go up from there…”)
- That Dickey’s forces franchisees to overpay its required vendors (who then kick-back “rebates” to Dickey’s corporate)
- That the Dickey’s Franchise Disclosure Document (FDD) contains “material falsities.”
Are you familiar with the Dickey’s Barbecue Pit franchise opportunity and the business ethics of its president, Roland Dickey, Jr.? Please share your opinion – positive or negative – with a comment below. Or email us in confidence at UnhappyFranchisee[at]Gmail.com.
[Image, left: Dickey’s franchisee Amy Meadows in her Grand Opening interview with the Pleasant Hills Patch.]
Dickey’s Allegations of Franchise Fraud
Plaintiff Amy Meadows purchased a Dickey’s franchise in Pleasant Hill, California.
Plaintiff Dawn Toff purchased a Dickey’s franchise in Hollister, California.
Plaintiff Donna Schiano purchased a Dickey’s franchise in San Ramon.
Plaintiff Alfred Pena purchased a Dickey’s franchise in Tracy, California.
While the entire complaint is posted below, here are their allegations against Dickey’s Barbecue Restaurants, Inc. in regard to the First Cause of Action: Fraud:
FIRST CAUSE OF ACTION
20. Defendants made the following representations to Plaintiffs:
a. Conversion of a restaurant space into a Dickey’s, including payment of all opening inventory, permit fees, franchise and training fees, would total approximately $60,000.
b. Dickey’s was selling franchises in Northern California pursuant to a lawful FDD.
c. Dickey’s would provide a protected territory.
d. Dickey’s would provide an on-site evaluation prior to lease execution.
e. Dickey’s would provide pre-opening training.
f. Royalties and marketing fees would be based on the “net” sales.
g. Dickey’s provided a valid basis for estimating anticipated restaurant revenues.
h. Franchisees could use alternate suppliers so long as they suggested sources that could be objectively evaluated as reliable.
i. Franchisees could add new menu items so long as they could demonstrate that they were conducive to the Dickey’s image and standards.
j. Dickey’s operated a national marketing program and conducted promotions.
k. Dickey’s would provide accountings related to its marketing program.
l. The franchisees could purchase used equipment.
m. A senior member of Dickey’s would be present for the restaurant opening.
n. Dickey’s negotiated competitive prices at group discount rates.
21. Those representations were false as follows:
a. The cost of the build-out alone exceeded specific and written representations. This did not include opening inventory, permit fees, franchise fees or training costs.
b. The FDD contained material falsities.
c. Dickey’s did not provide a protected territory.
d. Dickey’s did not provide a pre-opening evaluation of the restaurants.
e. Dickey’s did not provide pre-opening training. Instead, they made the franchisees travel to Texas to wash dishes in their affiliates’ corporate stores.
f. Royalties and marketing fees were not calculated based on the net sales. Rather, they were calculated based on gross sales. Had they been calculated based on net sales, no royalties would ever have been due because store was never profitable.
g. Pre-contract representations created an unreasonable expectation of how much the stores would earn.
h. The Franchisees repeatedly requested a change in vendors to decrease costs and improve product quality. Each time the new vendor was either superior or equal to the existing vendor but no approval was forthcoming.
i. Plaintiffs repeatedly requested permission to offer new menu items such as BBQ chicken salad or breakfast items, all of which are offered by other
Dickey’s stores. However, Dickey’s refused each request.
j. Dickey’s did not offer a marketing program in Northern California. Those dollars were spent in Texas where they provided no benefit to the California restaurants. Dickey’s also did not provide promotions. The franchisees were on their own to come up with their own promotions on a case by case basis.
k. The franchises never received any marketing fund accountings. Dickey’s required the franchisees to purchase expensive oversized and new equipment.
m. A senior member of Dickey’s did not attend the store openings.
n. Dickey’s franchisees were forced to purchase product at over-market prices and were not permitted to source cheaper equivalent quality replacements.
22. At the time each of the above misrepresentations was made, Defendants knew or should have known of the falsity.
23. Plaintiffs relied on the representations in deciding to pay the application fee and open a Dickey’s Barbecue Pit.
24. As a result of Defendants’ bad conduct, Plaintiffs suffered injury in an amount to be proven at the time of trial.
25. Defendants committed the above-described conduct with oppression, fraud, and malice, entitling Plaintiffs to an award of punitive damages.
Read the entire complaint here, as downloaded from PACER this morning:
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Tags: Meadows et al v. Dickey’s Barbecue Restaurants Inc., Dickey’s Barbecue Pit Class Action Lawsuit, Dickey’s class Action Lawsuit, Dickey’s franchise lawsuit, Dickey’s franchisee lawsuit, Dickey’s Barbecue Pit, Dickey’s Barbecue Pit franchise, Roland Dickey Jr., Roland Dickey, Vincent Bartolotta Jr., Karen Frostrom, Rebecca Blain Morrison, Thorsnes Bartolotta McGuire, Amy Meadows, Dawn Toff, Donna Schiano, Alfred Pena