Risk Score
Pending analysis
Investment Range
$210,105 - $528,589
Total US Locations
366
Business Summary
Dickey's Barbecue Restaurants, Inc. franchises "Dickey's Barbecue Pit" restaurants that specialize in freshly prepared barbecue meats and other food and beverage items. These restaurants operate under a comprehensive business format system, utilizing proprietary marks, distinctive designs, confidential recipes, and operational procedures. Dickey's Barbecue Restaurants, Inc. aims to offer high-quality, freshly prepared barbecue-style food quickly and at affordable prices in comfortable settings. The franchise offers different restaurant formats, including Traditional, Non-Traditional venues (such as food courts, convenience stores, or mobile units), and Delivery-Carryout only locations that do not feature dining areas.
Corporate History
Dickey's Barbecue Restaurants, Inc. was formed as a Texas corporation on March 7, 1994, and has offered "Dickey's Barbecue Pit" restaurant franchises since its formation. The company is a wholly-owned subsidiary of Dickey's Capital Group, Inc. Although Dickey's Barbecue Restaurants, Inc. itself does not operate restaurants, its affiliate, Dickey's Barbecue Pit, Inc. (DBP), has operated restaurants under the "Dickey's Barbecue Pit" name since 1941, with various company-owned locations opening over the years. Other affiliates have also operated joint venture restaurants. Historically, Dickey's Barbecue Restaurants, Inc. expanded its offerings, licensing Combo Kitchen to offer "Dickey's Barbecue Pit" menu items (2021-2023) and franchising virtual kitchen locations (2020-2023). However, Dickey's Barbecue Restaurants, Inc. has strategically shifted its focus back to growing its core Traditional, Non-Traditional, and Delivery-Carryout restaurant formats. An affiliate, Virtual Brands, Inc. (VBI), also previously offered franchises for other virtual concepts like "Big Deal Burger," "Wing Boss," and "Trailer Birds" (2020-2022), with plans to resume "Trailer Birds" franchising.
Financial Overview
Investment Range
$210,105 - $528,589
Franchise Fee (High)
$20,000
Royalty %
6%
Marketing %
3%
Equipment Costs (Low)
$187,600
Equipment Costs (High)
$542,200
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Dickey's Barbecue Restaurants, Inc. has received an unqualified audit opinion for its financial statements, indicating fair presentation. However, the company has significant deferred tax assets which are offset by a valuation allowance due to uncertainties about realizing them, primarily related to net operating loss carryforwards of approximately $1,385,000 at May 31, 2024. This suggests Dickey's Barbecue Restaurants, Inc. has a history of taxable losses. A substantial portion of the company's assets, specifically all assets, serve as collateral for a $26,285,000 debt of its parent company as of May 31, 2024. While the auditor's report mentions management's responsibility to evaluate going concern, the final opinion does not include a going concern qualification, implying no substantial doubt was found. The company also accrued $2.2 million in 2022 for litigation settlements.
Financing Details
Dickey's Barbecue Restaurants, Inc. does not offer any direct or indirect financing to its franchisees. However, upon request, Dickey's Barbecue Restaurants, Inc. will refer prospective franchisees to independent lenders who may be able to finance a portion of their initial investment. Dickey's Barbecue Restaurants, Inc. does not guarantee that such financing will be available, nor does it receive any payment for these referrals. Dickey's Barbecue Restaurants, Inc. also does not guarantee any franchisee's notes, leases, or other financial obligations.
Performance Metrics
Total US Locations
366
Franchised Units
357
Corporate Units
9
Avg Square Footage
1,167
Franchising Since
1994
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
Yes
Litigation Count
10
Litigation Summary
Dickey's Barbecue Restaurants, Inc. has 10 disclosed litigation cases. Five of these are pending arbitration proceedings filed by current and former franchisees in 2023, alleging fraudulent inducement, RICO claims, unfair trade practices, breach of contract, fraud, conversion, and civil theft, with damages sought ranging from $460,000 to over $1,000,000. Dickey's Barbecue Restaurants, Inc. denies these allegations and has asserted counterclaims in some. One ongoing federal court case from 2022 alleges alter-ego, fraudulent inducement, breach of contract, and fraudulent alteration/unlawful possession, with damages exceeding $75,000. Concluded litigation includes a class action lawsuit related to a data security incident from 2019-2020, which was settled in 2023 for $2.35 million. Several arbitration proceedings from 2021 found Dickey's Barbecue Restaurants, Inc. in breach of franchise agreements for issues like failing to provide an operations manual or restricting purchases from other suppliers, resulting in awards up to $215,760.91. A 2017 lawsuit regarding alleged Utah Business Opportunity Disclosure Act violations and misrepresentation was dismissed in 2022 after Dickey's Barbecue Restaurants, Inc. paid $500,000 in settlement. Additionally, a 2014 arbitration with a former franchisee was settled for $14,000, and a 2022 case regarding a refunded franchise fee was settled for $10,000.
Bankruptcy History
Dickey's Barbecue Restaurants, Inc.'s affiliates, Stanford Sonoma Corp. and ORS.COM, Inc., each filed for Chapter 11 bankruptcy reorganization on April 17, 2023, in the Northern District of Texas. Stanford Sonoma Corp. previously sold restaurant equipment and fabrication services, while ORS.COM, Inc. sold restaurant equipment to franchisees and other businesses. Both affiliates' businesses failed due to inflation, sourcing and shipping difficulties, and rising raw material costs. Their joint reorganization plan was confirmed on October 22, 2023, substantially consummated on February 28, 2024, and a final decree was entered on March 27, 2024. Dickey's Barbecue Restaurants, Inc. itself does not have any bankruptcy history.
Agreement Terms
Initial Term
20 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise, Dickey's Barbecue Restaurants, Inc. franchisees must provide written notice between 6 and 12 months before the initial term ends. They must repair or replace equipment, signs, and decor to conform to current brand standards, with a total cost not exceeding $100,000. Franchisees must also be in full compliance with their current agreement, satisfy all monetary obligations, provide proof of their right to occupy the location for the renewal term, and pay a $15,000 renewal fee. Additionally, they must sign Dickey's Barbecue Restaurants, Inc.'s then-current franchise agreement, which may have materially different terms including potentially higher Royalty Fees and advertising contributions. Franchisees must also execute a general release, meet current qualification and training requirements, and their restaurant's Net Sales-to-customer complaint ratio must be above the 50th percentile chain-wide.
Training & Support Program
Franchisor Assistance
Dickey's Barbecue Restaurants, Inc. provides comprehensive assistance to its franchisees. Before opening, this includes site selection counseling and evaluation (with the first three visits free), a list of approved architects and general contractors, and advice on equipment, signs, fixtures, and initial inventory. Franchisees and their managers receive an initial training program, including "Barbecue University" and on-site training. Dickey's Barbecue Restaurants, Inc. also provides Operations Manuals and a list of approved suppliers, and helps with local advertising campaigns for the restaurant's opening, including on-site support. After opening, ongoing assistance includes notifications for menu and pricing updates, continuous training and continuing education courses for managers, and advice on managing and operating the restaurant, covering new developments and operational improvements. Dickey's Barbecue Restaurants, Inc. manages a Marketing Fund for advertising, offers indemnification for trademark use, and conducts meetings and seminars. They provide ongoing operational assistance when needed, and assign a Regional Business Leader to advise on operational matters. Franchisees are required to participate in a catering hotline and philanthropic activities. Additionally, Dickey's Barbecue Restaurants, Inc. facilitates the payment of rent and utilities for franchisees and can provide interim management services for a fee in the event of an owner/operator's death or permanent disability.
Initial Training Hours
140
Training Location
Dickey's corporate training center in Plano, Texas, or other designated locations in the North Texas area.
Ongoing Support
After opening, Dickey's Barbecue Restaurants, Inc. provides ongoing support to its franchisees through notifications of menu and pricing changes, and various training programs for successor and replacement managers, including continuing education courses. Dickey's Barbecue Restaurants, Inc. offers advice and written materials on management and operations techniques, new developments in equipment, food products, and systems. They conduct regular inspections of restaurants and evaluations of products and services to ensure high standards. Dickey's Barbecue Restaurants, Inc. also provides ongoing operational assistance when needed, and assigns a Regional Business Leader to advise on operational matters. Franchisees are required to participate in a catering hotline and philanthropic activities. Additionally, Dickey's Barbecue Restaurants, Inc. facilitates the payment of rent and utilities for franchisees and can provide interim management services for a fee in the event of an owner/operator's death or permanent disability.
Franchise Requirements
Ideal Candidate Profile
Dickey's Barbecue Restaurants, Inc. is looking for individuals who can serve as an Owner/Operator, holding at least a 20% ownership interest in the franchisee entity. This individual must work full-time (at least 40 hours per week) in the restaurant, be fully authorized to manage and control daily business affairs, and successfully complete "Barbecue University" training. In addition to the Owner/Operator, franchisees must appoint at least two full-time managers per restaurant to handle day-to-day supervision, who must also complete required training. The ideal candidate demonstrates sufficient resources for restaurant development and is committed to hands-on, full-time involvement in the business.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
Full-Time
Territory Type
Limited
Territory Size Requirements
Initially, Dickey's Barbecue Restaurants, Inc. grants an "Assigned Area" which is typically a city or township. Upon acceptance of a specific restaurant location, this area is reduced to a "Primary Area," defined as a one-mile radius around the accepted restaurant location.
Staffing Notes
Dickey's Barbecue Restaurants, Inc. requires each franchisee to designate an Owner/Operator who holds at least 20% ownership in the entity and works full-time (at least 40 hours per week) on-premises. This Owner/Operator is the sole point of contact for franchise matters and must successfully complete Barbecue University training. Additionally, each restaurant must have at least two certified managers per restaurant who are dedicated full-time to day-to-day management and supervision. These managers must meet Dickey's Barbecue Restaurants, Inc.'s standards and complete initial training. Franchisees must also hire additional personnel as deemed necessary by Dickey's Barbecue Restaurants, Inc., with all employees meeting specific criteria and training requirements. If a franchisee operates more than two restaurants, they may be considered a multi-unit operator and required to appoint a Director of Operations (holding at least 5% equity and involved full-time) and potentially District Managers to oversee operations.