The business relationship has soured between Tilted Kilt Pub & Eatery and its suburban franchise developer.
Tilted Kilt owners sued area developer 1220 LLC, based in Rolling Meadows, last November on accusations that the company made “unlawful financial performance representations” to individuals interested in opening franchises. The restaurant chain wants a judge to terminate its contract with the suburban firm in addition to seeking damages, according to court documents.
On Tuesday, 1220 LLC filed a countersuit slamming the company – known for its traditional pub fare served by scantily clad waitresses – for breach of contract, accusing them of mandating business practices that led to their own franchisees unsuccessful restaurants’ ultimate demise.
The developer claims Tilted Kilt restaurants made “grossly unreasonable or bad-faith decisions” impacting the revenue of franchises. It wants $20 million in damages, the Chicago Tribune reports.
In 2007, 1220 LLC, owned by four suburban brothers, partnered with Tilted Kilt to develop and sell franchises in the Chicago area in exchange for franchise-related fees. Tilted Kilt claimed two 1220 business partners made false claims to potential franchisees that the restaurants made an average of $2.5 million in 2009, leaving them with unrealistic expectations. Tilted Kilt alleged that business deal led to the new franchise owners opening locations in Gurnee, Vernon Hills and Kenosha, WI, which “sustained significant losses.”
According to 1220's lawsuit, on the other hand, Tilted Kilt was to blame for the significant losses that led to the restaurants' struggles. The developer claims Tilted Kilt owners required franchisees to purchase “grossly unreasonable” expensive equipment and ignored their ongoing requests, negotiated unfavorable agreement terms with local beer and liquor vendors, failed to set them up with proper marketing tools, and used tactics to set management up “at a severe competitive disadvantage,” while not allowing them to seek counsel from outside resources.
All three restaurants are now closed, according to the complaint.
The countersuit from 1220 LLC claimed Tilted Kilt “has schemed for years to terminate” its contract to get control of the developer's revenue stream, saying in the lawsuit the company is "completely out of control and is no longer even trying to live up to its contractual duties.