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An arbitrator awarded a former Illinois Dickey’s franchisee $700,000, determining the company violated the Illinois Franchise Disclosure Act.
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Story Highlights
Dickey’s for years has been on the receiving end of lawsuits and complaints from franchisees.
The California Department of Financial Protection and Innovation ordered Dickey’s to stop its unlawful practices and pay $36,800 in penalties.
A former Dickey’s franchisee in Illinois is set to receive a $700,000 award after a judge ruled in its favor to uphold an original decision made by an arbitrator in April 2025.
Dickey’s Barbecue Pit violated California’s Franchise Investment Law, according to the state’s Department of Financial Protection and Innovation.
The state found that Dickey’s misrepresented itself to franchisees by hiding the “true number” of franchise restaurants that have closed. Dickey’s, according to the DFPI, told prospective operators that 20 franchisees ceased operations, when the real number was 36. Dickey’s missed the additional 16 “due to clerical errors,” according to court documents.
The department reported that these violations occurred between November 2023 and March 2026.
“This underreporting grossly misrepresented the success of the business model, misleading small business owners,” the DFPI wrote in a release.
The state ordered Dickey’s to stop its unlawful practices and pay $36,800 in penalties, per the DFPI. If Dickey’s fails to comply, the state can terminate its franchise registration.
“Dickey’s Barbecue Restaurants, Inc. takes compliance and transparency seriously across all of our markets,” a Dickey’s representative said over email. “The recent matter in California was limited to a minor administrative issue, the type of routine fine many businesses encounter, and it has been learned from and resolved.”
California’s Franchise Investment Law requires franchisors to provide accurate information when selling franchises.
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Dickey’s did not file an updated franchise disclosure document this year in any of the nine states that make franchise registrations publicly available, but its 2025 FDD reported 386 domestic locations at the end of 2024. From 2023 to year-end 2024, the franchise closed 98 net restaurants. In 2024, franchisees sold 108 locations to other franchisees.
Back in 2017, Dickey’s had 564 restaurants. It’s unit count declined every year since, save for a 12-store net increase in 2021.
Dickey’s FDD in 2025 had a discrepancy from California’s findings, reporting that 97 locations nationwide ceased operations, 23 of which were in California.
California’s DFPI is upping its franchise market oversight “to ensure entrepreneurs are not improperly deceived or coerced,” the organization said.
Arbitration woes
A former Dickey’s franchisee in Illinois is set to receive a $700,000 award after a judge ruled in its favor to uphold an original decision made by an arbitrator in April 2025. The ruling comes after Dickey’s asked a federal court to vacate the award, claiming the arbitrator overstepped.
Judge Jane Boyle, of the United States District Court of the Northern District of Texas, ruled in favor of the franchisee, G Six Consulting, this summer.
G Six operated one Dickey’s location in Illinois for about three months and went to arbitration with the franchisor over who was responsible for the failed location, according to court documents. The franchise agreement requires a franchisee to pursue arbitration, which involves a neutral arbitrator who tries to settle a dispute between both parties, before bringing a matter to court.
Following the initial arbitration decision, Dickey’s filed a lawsuit to overturn the ruling, a move that brought the formerly private case public, claiming the arbitrator, Gary Leydig, should not have issued the $700,000 award.
“Dickey’s exercised its rights within the judicial system to seek review of the award, as is standard practice in complex commercial disputes,” the Dickey’s representative wrote.
The franchisee tried on several occasions to depose Dickey’s Chairman Roland Dickey Jr., Vice President of Development Deborah Longworth and Senior Vice President Jeff Gruber for the arbitration case. After the executives didn’t show up for depositions in November 2024 and Dickey’s later declined to produce them, Leydig issued a final deposition order in February 2025, warning the franchisor that if it didn’t comply, it could result in the imposition “of the full array of sanctions available under the [American Arbitration Association’s] rules,” according to court documents.
Dickey’s again reportedly said it wouldn’t produce the executives.
In April 2025, the arbitrator ruled in favor of the operator and stated the franchisor violated the Illinois Franchise Disclosure Act. In Dickey’s cross-petition to vacate the award, it claimed the arbitrator “exceeded his authority and was guilty of misconduct.”
The Federal Arbitration Act allows courts to vacate an arbitration award if corruption or fraud were involved, if the arbitrator is guilty of misconduct or if the arbitrator exceeded their powers.
In this case, Dickey’s was required to show proof that vacation was necessary based on one of those reasons, per court filings. The franchisor claimed Leydig overstepped by issuing deposition orders and sanctioning Dickey’s for disobeying those orders.
The judge ruled that the arbitrator did not exceed his authority and isn’t guilty of misconduct.
Past lawsuits
Dickey’s for years has been on the receiving end of lawsuits and complaints from franchisees. Operators report paying well over the estimated initial investment cost provided in the brand’s FDD.
A group of Dickey’s franchisees sued the brand in October 2024 for fraud and misrepresentation. The operators are Daniel Unsworth of DLU in Ohio and Jeremy and Nicole Kolbach of Star BBQ in Idaho. Each party said they closed their restaurants just months after opening.
“Dickey’s is unconcerned with the failure of its initial franchisees like Unsworth and Kolbach,” the suit, filed in Ohio, stated. “Its modus operandi is to fraudulently induce investors to open new franchises, (typically at a cost of $800,000.00 to one million dollars), and when the revenues cannot sustain the debt incurred and the original franchisee inevitably fails, Dickey’s controls the secondary market for the re-sale of franchisee.”
A judge stayed the case in April 2025 pending mediation and/or arbitration.
A four-unit Michigan-based operator, Smokin’ Dutchman, filed for bankruptcy in September 2024. The group listed total debt of $2.1 million. Judge Scott Dales dismissed the bankruptcy case in February 2025 and in the ruling wrote “creditors may take whatever action is permitted by applicable nonbankruptcy law to collect their respective debts.”
In December 2024, CEO Laura Rea Dickey said in a statement responding to a Restaurant Business article about franchisees’ struggles with the brand: “Our franchisees are family, and their success is our highest priority. While we cannot control misleading narratives in the media, we can and will continue to stand behind our franchisees with the support, tools, and resources they need to thrive. The truth will always prevail, and the strength of the Dickey’s brand speaks for itself.”
“Most folks read something that doesn’t add up and instinctively question it, but that doesn’t mean it’s OK to defame our brand or try to devalue our franchisees’ businesses.” Rea Dickey said in a statement last year. “Ask tough questions. Report facts. Tell the full story. Don’t ignore context. Our business is barbecue and we’re great at what we do. While I’ve spent the last 20 years smelling barbecue over hickory wood every day, I can still smell when something isn’t right and biased storytelling doesn’t pass the smell test. Thankfully, there are a lot of folks out there still interested in reporting.”
The brand continues to sell franchises and open restaurants. In June it announced new franchisee PJ Patel opened a location Blakely, Georgia. In May, Jennifer Holder opened a second unit in Louisiana.
