Dickey’s Barbecue Pit Faces Lawsuit Over Construction Costs

News Summary

Dickey’s Barbecue Pit is under legal scrutiny as franchise owner Josef Francis Gregory sues the chain for overcharging on construction expenses for his restaurant in Nassau Bay, Texas. The lawsuit claims that improper charges from HDH Construction resulted in financial losses exceeding $1 million. Dickey’s responds by disputing the allegations, asserting that franchise agreements clarify payment responsibilities. Amidst ongoing franchisee criticisms and recent closures, the chain’s reputation may be at stake as legal proceedings unfold.

Texas – Dickey’s Barbecue Pit, a widely recognized barbecue chain, is facing legal challenges as Josef Francis Gregory, a franchise owner, has filed a lawsuit against the company claiming overcharging related to construction expenses for his franchise in Nassau Bay, Texas. The lawsuit was initiated on July 9, 2024, in Harris County Court.

In the lawsuit, Gregory alleges that Dickey’s improperly charged him for construction costs connected to the build-out of his restaurant. He asserts that the franchise agreement he signed in 2019 provided him with the authority to approve or disapprove of contractors as well as their work. Despite this, Dickey’s selected HDH Construction LLC from Caycee, South Carolina, for the construction, which Gregory claims resulted in financial losses due to incomplete work. As a result, he is seeking damages that exceed $1 million.

Gregory financed the construction expenses through Dogwood State Bank in North Carolina and reported paying “hundreds of thousands of dollars” to HDH Construction. He contends that these payments were made for work that was not completed, asserting that HDH abandoned the project after receiving funds which he believes were unapproved and unwarranted.

Dickey’s Barbecue Pit responded by challenging the claims made in the lawsuit, stating that it contains “significant factual inaccuracies.” The company emphasizes that it did not mandate Gregory to engage with specific contractors or lenders, and that the franchise agreement allegedly outlines payment responsibilities, placing the control over authorizations with the franchisee. They further clarify that there is no co-conspiratorial relationship with HDH Construction, and both entities operate independently of one another.

Founded in 1941 by Travis Dickey in Dallas, Texas, Dickey’s Barbecue Pit has grown to encompass 366 locations across the U.S. and 19 international outlets, totaling 385 locations worldwide. However, the chain has faced scrutiny in recent months. In the 2024 fiscal year alone, Dickey’s closed 97 restaurants and sold 106 to franchisees, indicating possible challenges within the business.

In addition to Gregory’s allegations, Dickey’s Barbecue Pit has faced criticism on several fronts. Reports suggest that numerous franchise owners have claimed they were misled regarding investment costs, which were purportedly inflated in promotional materials. The New York Times previously reported that many franchisees felt economically pressured into investing based on erroneous financial information, leading to significant dissatisfaction.

Concerns have also arisen regarding the accuracy of sales estimates presented during the franchise recruitment process, with many operators asserting that their actual sales have consistently failed to meet expectations. These circumstances have fostered a wave of frustrations among franchisees, some of whom have called for policy changes and improvements within the company. Recent developments also revealed that a Michigan franchise operator filed for Chapter 11 bankruptcy, further highlighting the financial struggles within the chain.

As this lawsuit unfolds, it may significantly impact the reputation and operational strategies of Dickey’s Barbecue Pit, which strives to maintain its standing in a competitive market. Observers will be closely following the developments in this case as it progresses through the legal system, with potential implications for both the franchise owner and the franchise brand moving forward.

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