A former Dickey’s franchisee sues over mandatory vendor use claims, but the company says the lawsuit is frivolous.
HOUSTON — A former Houston-area franchisee has filed a lawsuit against Dickey’s Barbecue, claiming the company forced him to use preferred vendors for construction and financing services that resulted in financial loss. In response, the Dallas-based restaurant chain has called the allegations “false” and “without merit.”
Gregory Restaurant Group, which planned to open a Dickey’s location in Houston, filed the lawsuit in Harris County. Its owner, Josef Gregory, alleges Dickey’s misrepresented how much control franchisees actually have and strongly encouraged the use of certain third-party companies — vendors the lawsuit claims caused costly delays and mishandled funds.
In a statement issued this week, Dickey’s said its franchise model gives owners full control over who they hire to build and finance their restaurants.
“Franchisees are solely in charge of funding or financing their own restaurant build out, outside of Dickey’s,” said CEO Laura Rea Dickey. “The ultimate choice of who to hire for construction, financing, or any other development service rests entirely with the franchisee.”
The franchisee argues that Dickey’s required him to use HDH Construction to build the franchise and Dogwood State Bank to finance the project.
The lawsuit claims that Dogwood State Bank then made hundreds of thousands of dollars worth of payments to HDH that the franchisee did not authorize. The filing also claims HDH’s work was shoddy and not up to standard.
In the end, the franchisee’s funding ran out due to the alleged unauthorized charges, and HDH abandoned the project entirely, the complaint states.
Dickey’s says it does not require its franchisees to use specific vendors, noting that none of its other franchisees had used those particular companies, and that it had no prior relationship with them.
The lawsuit accuses Dickey’s of fraud, negligence, breach of contract, and unjust enrichment, among other claims. It also argues the vendors acted as agents of Dickey’s — something the company strongly denies. The franchisee is seeking damages in excess of $1 million.
A statement from Dickey’s says that the company intends to fight the lawsuit and remains confident it will be cleared of any wrongdoing.
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