This venture became a financial disaster.
BBQ franchises nationwide are facing lawsuits from franchisees who claim they were misled by promises of lucrative benefits that turned out to be deceptive.
“Buying this franchise was the worst financial decision I ever made,” said Scott Lafer, who opened a Dickey’s BBQ Pit in Freeport, Long Island.
Lafer, currently burdened with $500,000 in debt and on the brink of foreclosure, took out a small business management loan in December 2020 to launch his restaurant during the pandemic. The business closed by June 2022, just under two years later.
“I thought we were in this together; if I succeeded, they would too,” Lafer, 58, from Plainview, expressed. “But I found out that their success came at my expense.”
He mentioned feeling pressured to secure the location quickly. Dickey’s estimate for construction from his preferred vendor was “three times higher” than what he ended up paying after hiring a different contractor.
“I invested $500,000 to build the place,” Lafer noted, stating he hasn’t pursued legal action due to lack of resources.
Lafer also faced issues with a $16,000 smoker from a Dickey-authorized vendor that malfunctioned repeatedly. When he sought guidance from the company in January 2021, he felt reprimanded for including senior executives in his correspondence.
“When I mentioned I wanted to sell, they told me most of their stores would go for around $25,000,” Lafer recalled.
He eventually reached a breaking point when Dickey’s headquarters took control of his online menu, leading to confusion for customers and delivery drivers—claims the company denies.
“I had to close up shop and leave. Now I’m stuck with all this debt and facing the loss of my home,” Lafer said.
Another former franchisee, Jerry Stephen, opened a 2,150-square-foot Dickey’s in Center Chiac, Long Island in September 2020. A 2018 article on the company’s website mentioned that Stephen intended to expand to 21 locations in New York State.
Stephen claimed he withdrew from the store development agreement after paying about $20,000 to buy the franchise, stating the company backtracked on their commitments.
“They seemed to forget their promises and avoided creating a formal contract,” he said. “I had plans for expansion, thinking about my retirement.”
Having previously owned Long Island’s first Quiznos, Stephen found that Dickey’s requirement to purchase from approved vendors and pay marketing fees—often lacking real promotions—cut into his profits.
“I could source much cheaper through alternative distributors,” he added. “Their franchise agreement is unyielding; they have you trapped.”
Though considering legal action, Stephen sold his franchise at half the price.
“If you’re budgeting $500,000 but it actually costs $800,000 to launch, you’re likely setting yourself up for credit card debt or even a second mortgage,” said Keith Miller, a franchise advocacy consultant.
A group of Dickey franchisees has filed lawsuits and complaints with the Federal Trade Commission, alleging the company has made false or misleading claims and left out key information in their franchise materials.
As reported by the New York Times, many of these stores have shuttered within a year, with some franchisees owing up to $1,000,000 to creditors.
The CEO of Dickey, Laura Rea Dickey, commented that Stephen “was not fulfilling the expectations of his role as an owner-operator” after failing to meet store benchmarks.
On July 24, a member of the Maryland Attorney General’s Office found Dickey made inappropriate disclosures, not including previous franchisee contact details in 80 financial documents—as separate from the lawsuits.
Former franchisees cited monthly costs of a 5% royalty and a 4% marketing fee, which Dickey stated would be “6% and 3% respectively.”
“The loyalty and marketing fees significantly dent your profits,” noted Jason Kaplan, a CEO advising restaurant owners globally. “This issue will affect profitability without the necessary funds.”
Lafer, Stephen, and others hope these developments will push for more transparency within the franchise industry.
Dickey’s CEO countered that Stephen was released from his agreement due to not meeting expectations and that Lafer’s store received poor online reviews and low results in audits.
She also stated that the company doesn’t charge franchisees for the sale of equipment or products.
Interestingly, not all franchisees share negative experiences. Gary Mulligan, owner of a Dickey’s in Whiting, New Jersey, invested $700,000 in his store and expressed satisfaction with the partnership.
“Dickey feels like family to me,” Mulligan remarked. “They are very attentive.”
