Slim Chickens Sued by Restaurant Operator Over Alleged Deception and Frozen Chicken

Slim Chickens bought this 35,700-SF, four-story office building in Fayetteville in 2023. (Google Maps)

Update (6/16/25): Slim Chickens in a statement sent to Arkansas Business following the publication of this article said the plaintiffs’ claims were unfounded.

“Slim Chickens categorically denies the allegations made by Gary Grewe, owner of R-Solutions and the sole Slim Chickens franchisee for the locations he owns,” the statement said. “The complaint is without merit and is an attempt to shift blame for longstanding, well-documented performance issues by this lone franchisee. We are confident in our position and will vigorously defend ourselves against these unfounded claims through the appropriate legal channels at the appropriate time.

“For more than 22 years, Slim Chickens has built a reputation for strong franchise partnerships, consistent growth, and a commitment to the communities we serve. With hundreds of restaurants operated by dedicated, excellent franchisees, our brand, culture, and operational standards speak for themselves. We remain focused on supporting our franchise partners across the U.S. and internationally — and on upholding the high standards that have defined our success.”

Original story: Several Slim Chickens franchise operators have accused the Fayetteville fast-food restaurant chain of providing prospective franchisees with misleading financial information that left them open to widespread losses, according to a lawsuit filed earlier this month in Washington County Circuit Court.

Although Slim Chicken’s Development Co. “promotes Slim Chickens as a lucrative and scalable franchise opportunity, the reality is starkly different,” according to the lawsuit filed against it by R Solution Holdings LLC and R Solution 2.0 LLC, both of St. Louis, and SCMO Development Group LLC of Fayetteville. The three companies are related and share common ownership. They are referred to in the lawsuit as R-Solution. The group owns and operates 10 Slim Chickens franchise locations across Illinois, Missouri and Kentucky, and has invested more than $15 million in the stores, court records indicate.

“Many franchises, including R-Solution’s, are hemorrhaging money, in direct contradiction to the rosy projections and puffed-up data presented by Defendant,” according to the suit filed by the group’s attorney, Marshall Ney of Friday Eldredge & Clark LLP’s Rogers office. “The misrepresentations were not merely puffery or isolated exaggerations, but part of a systemic sales strategy designed to obscure the risks and realities of the Slim Chickens franchise system.”

The allegations in the lawsuit provide a glimpse into the fast-food restaurant company, now with more than 290 locations, and includes allegations that the company switched to frozen chicken in 2023 and most of its dipping sauces, which are promoted as “house-made,” are prepackaged.

R-Solution said that as a result of Slim Chicken’s Development’s alleged misconduct, it has spent an additional $3.3 million to support operations, meet payroll and cover essential costs.

Slim Chickens CEO Tom Gordon said in a statement to Arkansas Business that Slim Chickens is aware of the lawsuit.

“While we do not comment on pending litigation, Slim Chickens remains committed to maintaining strong, collaborative relationships with all of our franchise partners and to uphold the values that have guided [our] brands since day one,” he said.

Opening Slim Chickens

Founded in 2003 in Fayetteville, Slim Chickens expanded significantly through franchising in 2013, the lawsuit said. It has opened restaurants in Europe and Kuwait.

“Slim Chickens emphasizes fresh ingredients and a casual dining environment, also catering to a broad customer base,” the lawsuit said.

Around July 2019, R-Solution decided to invest in Slim Chickens franchise restaurants. The R-Solution group is involved in real estate development and restaurant franchising and says it has participated in the development of more than 4 million SF of commercial space.

R-Solution decided to invest based on Slim Chicken’s Development’s representations “concerning the strength, scalability, and profitability of the Slim Chickens business model,” the lawsuit said.

R-Solution bought its first three locations in Illinois, and the stores required an investment of more than $2.5 million. (One of its locations has since closed.)

R-Solution’s total investment in Slim Chickens restaurants was more than $15 million. The suit says it also paid about $450,000 for the rights to develop two territories in Illinois and Missouri.

But when R-Solution began operating the restaurants, it “became increasingly clear that the core economic assumptions underlying its investment were based on incomplete, misleading, and in some cases, materially false representations,” the lawsuit said.

The Numbers

Slim Chicken’s Development promised high average unit volume, or AUV, which is the average annual sales by a franchise’s individual store, according to the lawsuit.

“These figures were not presented as aspirational outliers but rather as typical or expected financial results for franchisees,” the lawsuit said. Instead, they represent “a small subset of unusually high-performing units.”

In 2019, average AUV for all standard prototype stores was $1.24 million, while tier one stores — which included just four locations — posted AUVs of $2.35 million, R-Solution alleges.

“The resulting profitability profile is highly distorted and misleading, and has been used to induce franchisees, including R-Solution, to commit substantial capital under false pretenses,” the lawsuit said.

Slim Chicken’s Development continued to promote the outliers as the representation of the franchise system as a whole, the lawsuit said.

In 2024, Group 1, which had 20 stores, reported AUVs of $3.86 million while 116 standard stores averaged $2.41 million, the lawsuit said.

“Despite this clear data showing that Group 1 stores are extreme outliers, [Slim Chicken’s Development] consistently promotes their performance as indicative of the franchise system as a whole,” the lawsuit said.

But Slim Chickens also promoted the higher AUV figures in media interviews, the lawsuit said.

Gordon, Slim Chickens CEO, told Nation’s Restaurant News in January 2024 that “Our tier one stores have AUVs north of $3.5 million. … We’re winning this conversation, and that is driving huge interest in growth,” the lawsuit said.

R-Solution, however, said that the number of tier one stores was not listed in the articles or promotions nor was any comparative data offered.

R-Solution relied on those alleged inflated figures when it decided to open locations.

But the actual performance “fell far short of the projected AUVs,” the lawsuit said.

R-Solution said its stores have underperformed their expectations, “resulting in diminished returns on its $15 million investment and millions more in capital infusions — losses directly traceable to Defendant’s false and misleading inducements,” according to the lawsuit.

‘Fresh, Never Frozen’

In early 2023, Slim Chickens went from a “fresh, never-frozen chicken to a frozen, premarinated product — despite continuing to market its offerings to consumers as ‘fresh,’” the lawsuit said.

Slim Chickens presented the move as an evolution of its brand, and its executive team said the shift would save money, the lawsuit said.

“Defendant’s leadership expressed enthusiasm about the ‘amazing things’ the frozen product would bring franchisees ‘operationally and financially,’ promoting the shift as a benefit rather than a burden,” the lawsuit said.

“For R-Solution, however, the reality was far from the promised financial relief,” the lawsuit said.

It had to spend about $100,000 across its restaurants for the equipment to handle the storage and three-day thawing process of the frozen items, the lawsuit said.

The move also tied up cash because the chicken must thaw for three days before being used.

R-Solution also was required to order and pay for inventory before it used it, “compounding cash flow issues in an already challenged operating environment.”

And customers weren’t happy, the suit said. The frozen chicken “has consistently underperformed in terms of quality,” the complaint said.

The move to frozen chicken led to higher “product costs, logistical challenges, and reputational damage,” the lawsuit said.

R-Solution said Slim Chickens promotes its chicken as “fresh,” but the product does not qualify as fresh under U.S. Department of Agriculture standards, the lawsuit said. “Fresh” means whole poultry and cuts have never been below 26 degrees, according to the USDA.

Another cornerstone of Slim Chickens’ brand is its “house-made” dipping sauces. “In truth, at least 15 of the 17 sauces offered in stores are mass-produced by third-party vendors and shipped pre-packaged to all franchise locations, including R-Solution’s with no on-site preparation,” the lawsuit said.

R-Solution said the alleged deception not only misleads the consumers but inflates the brand’s perceived value.

R-Solution is seeking an unspecified amount of damages for allegations that include breach of contract and fraud. As of Tuesday, Slim Chicken’s Development hadn’t responded to the lawsuit.

The headline of this article was updated on June 17 at 10:55 a.m.