Rolling Meadows Pie Five Pizza franchisee sues company for breach of contract
The franchisee of a Rolling Meadows fast food pizza restaurant that abruptly closed after three months in business is suing the company for fraud and breach of contract.
Carl Dissette, who still operates Pie Five Pizza stores in Schaumburg, Indiana and Iowa, alleges in a federal lawsuit the Texas-based restaurant chain and parent company RAVE overstated financial figures to make the restaurants appear more attractive, while in reality the company is losing money and its stock price continues to dip.
Pie Five has sought to have the suit dismissed. A company spokeswoman on Wednesday declined to comment due to the pending litigation.
The fast casual chain, which started in 2011, allows consumers to customize personal pizzas and receive them out of the oven in five minutes. There's eight suburban locations, as part of the 100 company-owned locations and 450 franchise locations operating nationwide.
Dissette, who was one of the first Jimmy John's franchisees in Chicago in 1996, was running Pie Five restaurants in Indiana and Iowa early last year when then-company President Randall Gier proposed Dissette acquire the company-owned restaurant at 1428 N. Meacham Road in Schaumburg and open a new location at 1219 W. Golf Road in Rolling Meadows, according to the lawsuit.
Dissette agreed to the deal after looking at net sales figures for the Schaumburg location, but later discovered Pie Five “deceptively spiked sales” in Schaumburg by distributing some 3,000 unlimited “get a free pizza” coupons and accompanying coupon ads in local newspapers, according to the suit.
Dissette says in the suit he was “intentionally deceived” into believing Pie Five restaurants were profitable after reviewing company-provided franchise disclosure documents. He says those documents were misleading because company-required filings with the Securities and Exchange Commission disclosed financial loses.
In the suit, Dissette also takes issue with Pie Five's food distributor for high prices, delivery delays, lack of inventory, and bad or thawed food supplies. In one case last December, Dissette's restaurants couldn't offer chicken after a recall, and the Rock Island-based distributor didn't have a substitute lined up.
The suit also alleges Pie Five breached its contract by failing to remit suppliers' rebates to franchisees, didn't provide participation in an online ordering program, and hasn't given sufficient ongoing assistance.
The Rolling Meadows location closed in late December, just days after Dissette filed his lawsuit, and three months after the restaurant's opening. The Schaumburg location remains open, but in the suit Dissette is seeking Pie Five to take over possession and operation of both franchises, while demanding return of payments and reimbursement of losses. Dissette says he lost $500,000 by closing the Rolling Meadows store. He still operates four franchises in Indiana and one in Iowa, with plans to open another location in Iowa in May.
He also seeks punitive damages and payment for attorney's fees, while demanding a jury trial.