A group representing individual Sears department store owners sued the chain Monday, claiming its acquisition by Kmart created unfair competition because its products are now available at other retailers.

The Dealer Store Owners Association (search), which represents over 200 Sears stores that are owned and operated by families or individuals, filed suit against Sears Roebuck & Co. in Minneapolis federal court, the group said in a statement.

The suit charges Sears breached its contracts with the dealers by selling its products at discount chain Kmart and in other channels. It also claims the company has refused to renew the contracts of two dealers.

"Most dealers invested their life savings and 401k plans (search) in these stores," the group's president, Steve Granger, said in a prepared statement. "Now they risk losing it all... this is hardly the way to build trust in a brand name."

Sears Holdings Corp. (SHLD), which was created earlier this year when Kmart acquired Sears for $12.3 billion, could not be reached for comment.

Shares of Sears Holdings, the No. 2 U.S. retailer, were up 82 cents, or less than 1 percent, at $148.84 in morning trade on Nasdaq.