Steak 'n Shake has filed a lawsuit accusing its former senior vice president of business development, Rafik Farouk, of taking confidential company information with him when he left to take a franchise development job at rival chain Freddy's Frozen Custard & Steakburgers. The Indianapolis-based burger chain claims Farouk emailed himself pricing, sales and franchisee location data from his company account before departing, then used that information to help Freddy's target the same business opportunities Steak 'n Shake was pursuing.
The lawsuit, filed August 28 in Marion Superior Court and captioned Steak 'n Shake, Inc. v. Rafik Farouk, alleges breach of contract stemming from a code of conduct agreement Farouk signed in January 2025, according to The Republic News. That agreement barred Farouk from disclosing Steak 'n Shake confidential information or trade secrets to outside parties and prohibited him from taking company information for his own benefit or for the benefit of another entity, and it remained in effect even after his employment ended, the outlet reports. The case carries the number 49D01-2608-CE-048104.
What Steak 'n Shake Says Was Taken
According to the lawsuit as detailed by the same report, the confidential information Farouk had access to included non-public business, financial and personnel data, lease agreements, business plans, pricing, and information about franchisee and business locations. The complaint also lists recipes, intellectual property and marketing plans among the categories of protected material covered by the code of conduct agreement Farouk signed.
Steak 'n Shake alleges Farouk emailed information about the company's franchisee and business locations from his work account to his personal account before leaving the company. After his departure, the lawsuit claims he used that confidential information to support Freddy's business development efforts — the same kind of expansion push Farouk was hired to lead at his new employer.
A Las Vegas Deal and a Cease-and-Desist
The complaint states that Freddy's, communicating through Farouk, reached out to a Las Vegas casino operator about opening a new restaurant, and that Steak 'n Shake learned Farouk was contacting at least two franchisee and business locations about establishing Freddy's units. In one instance, the lawsuit alleges, Steak 'n Shake had been pursuing the very same location for its own restaurant.
After discovering the outreach, Steak 'n Shake sent Farouk a cease-and-desist letter demanding that he and Freddy's return all Steak 'n Shake-owned assets within three days of the July 2 notice. Freddy's attorneys responded to that letter, per the lawsuit's account, though Farouk himself did not respond to the cease-and-desist letter and did not respond to a request for comment from The Indiana Lawyer.
The Injunction Steak 'n Shake Wants
Steak 'n Shake is now asking the court to grant an injunction that would stop Farouk from using its confidential information going forward, on top of the breach-of-contract claims already filed. Any such request would be evaluated under the Indiana Uniform Trade Secrets Act, which allows courts to grant preliminary injunctions against actual or threatened misappropriation of proprietary information when a company shows it took reasonable steps to keep that information confidential, according to the Indiana General Assembly. Marion Superior Court has handled similar executive trade-secret disputes before; in February, Elevance Health sued four former executives there alleging more than $1 million in damages tied to breach of non-disclosure duties, as reported by The Indiana Lawyer.
Two Burger Chains, Two Different Trajectories
Farouk left Steak 'n Shake to accept a franchise development role at Freddy's, and the timing lines up with a period of aggressive growth for the Wichita-based chain. Freddy's confirmed in July that it remained on pace to open roughly 60 new locations in 2026, pushing its total footprint toward 600 units after growing from around 580 locations earlier in the year, per PR Newswire. That expansion has been fueled partly by lower-cost endcap and in-line restaurant prototypes that trim initial buildout costs to around $854,800, compared with more than $1.5 million for a traditional standalone drive-thru, Restaurant Dive has reported.
Freddy's own hiring announcement in April described the company bringing on Farouk as vice president of business development alongside Jackie Lobdell as vice president of franchise sales, explicitly to drive multi-unit growth in new and existing U.S. markets, according to Restaurant Dive. Farouk arrived with three decades of restaurant franchising and international brand development experience, including executive roles at P.F. Chang's and Bloomin' Brands and 18 years at Chili's, per FranchiseWire. The company's expansion has been backed by private equity firm Rhône Group, which acquired Freddy's in September 2025 for roughly $700 million, according to CoStar.
Steak 'n Shake, meanwhile, has spent years rebuilding after its footprint shrank from 628 locations in 2018 to under 450 by early 2025 under parent company Biglari Holdings, according to Wikipedia. The chain has since shifted toward a franchise partner model with a $10,000 buy-in and self-service kiosk ordering, a restructuring that Restaurant Business reports helped drive a 10.2% jump in same-store sales in 2025 — its strongest annual growth since 1992, excluding the pandemic rebound. That turnaround, tied partly to menu changes like frying fries in beef tallow and accepting Bitcoin, underscores what Steak 'n Shake stands to lose if a rival gained insight into its confidential expansion strategy.
