The founders of Z-Burger have agreed to split up after a dispute over ownership and brand rights. (Peter Tabibian)

The founders of Washington’s homegrown Z-Burger chain — known for its promotional giveaways and colorful 1950s atmosphere — have agreed to split up after a long-running dispute over ownership and brand rights.

Payam “Peter” Tabibian, the entrepreneur who has been the face of the eight-store chain, will keep the rights to the Z-Burger brand as well as ownership of its flagship store in Tenleytown and a store in Columbia Heights.

Brothers Mohammad and Ebrahim Esfahani have agreed to rebrand their Z-Burger restaurants in Arlington, near Baltimore, and in the District’s Glover Park and Southwest neighborhoods.

The out-of-court settlement follows a dispute that began in October 2014, when Tabibian sued the brothers after they banned him from day-to-day operations of the six Z-Burger restaurants that existed at the time.

Tabibian claimed in his suit that he was due a third of the profits with the Esfahanis, who were investors in the chain.

The Esfahanis alleged in a counterclaim that Tabibian had always been an employee and did not invest in the business, and therefore was not due a share of the profits.

Tabibian alleged that the Esfahanis provided the financial backing while Tabibian provided the concept and food-industry expertise.

The Esfahanis were dealt a setback in August when a federal judge in Greenbelt, Md., following a week-long evidentiary hearing, ruled that Tabibian could continue to use the Z-­Burger brand without restrictions. The judge also ruled that Tabibian could open new restaurants under the same trademark.

Tabibian said this week that he has plans to open more Z-
Burgers in Washington and beyond.

“Z-Burger began in D.C. and we want to bring more Z-Burger restaurants to other parts of the greater D.C. area,” Tabibian said. “Our goal is to grow Z-Burger as a national and possibly international brand.”

“We think we can replicate this concept beyond the D.C. area, and we’ve had numerous inquiries about expansion,” he said.

The Z-Burger chain, which began with a single store in Tenleytown in 2008, has eight stores and a food truck; several more restaurants are planned.

The Esfahani brothers were represented by a team led by Wood Law Offices of Rockville, Md. A spokesman for the firm declined to comment, referring questions to a jointly issued news release.

Tabibian will also keep Z­-
Burger restaurants on P Street NW near Dupont Circle and in Towson, Md., which were not subject to the litigation. He will also continue to operate the Z-Burger food truck.

“We view the two locations [Peter] got as two of the more highly prized locations,” said Brian Seal, an attorney for Tabibian with RatnerPrestia. Seal is referring to the locations at Tenleytown and Columbia Heights.