A four-unit Dickey’s Barbecue franchisee has declared bankruptcy, and it’s putting much of the blame on the franchisor.
CEO Krage Fox said in the court filing financial problems have been caused by Dickey’s, which allegedly imposed “extreme and unreasonable demands” onto the company’s financial resources. The court documents do not specify what the exact issues were.
Smokin’ Dutchman wants to use the bankruptcy filing to reject its franchise agreements to free itself from “the burden imposed upon it by Dickey’s.”
The franchisee operates in Michigan. It opened a Kalamazoo store in 2018, bought two units in Rockford and Jenison in 2020, and opened in Holland in 2022. The company earned $3.34 million in revenue in 2023, down from $3.68 million in 2022. In 2024 to date, Smokin’ Dutchman has earned roughly $2 million. The brand owes roughly $2.1 in debt.
Jeff Gruber, Dickey’s SVP of franchise relations, said that when Smokin’ Dutchman communicated its difficulties about a year and a half ago, Dickey’s provided significant operational support and corporate resources to help stabilize the franchise business. He also noted the franchisor’s Brand Champion program in which franchisees can receive 1 percent of their royalties back each month and an ongoing capital improvement reinvestment program involving the company partnering with operators to provide restaurant upgrades like new exterior signs, store interior refreshes, technology hardware upgrades, and local advertising.
“Dickey’s Barbecue Restaurants, Inc. goes above and beyond to support our franchisees,” Gruber said in a statement. “We hold ourselves and our franchisees to the same high standard of barbecue and service our guests rightfully expect. For anyone to state we imposed ‘extreme and unreasonable demands’ is simply inaccurate. We have provided and will continue to provide Smokin’ Dutchman with excellent support, the same support we have provided them over the last six years.
” … As with all our franchisees, we will continue to support Smokin’ Dutchman and look forward to them following Dickey’s brand standards and continuing to serve the Michigan community quality Texas-style barbecue,” he added.
Dickey’s finished May with around 365 restaurants in the U.S.
The franchisee joins several entities that have declared bankruptcy thus far in 2024, including BurgerFi, Red Lobster, Rubio’s Coastal Grill, Tijuana Flats, Sticky Fingers, Oberweis Dairy, Tocaya and Tender Greens, Roti, Foxtrot and Dom’s Kitchen, a 126-unit Pizza Hut franchisee, a 25-unit Arby’s franchisee, a 48-unit Subway franchisee, a 17-unit Popeyes franchisee, World of Beer, Buca di Beppo, and a six-unit Alamo Drafthouse Cinemas franchisee.
