Risk Score
Pending analysis
Investment Range
$1,766,798 - $5,822,933
Franchise Fee
$35,000
Total US Locations
1,510
Business Summary
Applebee's Neighborhood Grill & Bar operates sit-down, table service restaurants that offer a wide variety of moderately priced, high-quality food and alcoholic beverages in a distinctive, casual setting. Applebee's aims to be an attractive, friendly "neighborhood establishment" that provides a comfortable and warm atmosphere with good value and prompt service, appealing to both families and adult groups. The franchise also explores new concepts like fast-casual, quick-serve, virtual brands, and dual-brand restaurants.
Corporate History
Applebee's Franchisor LLC was formed in Delaware on July 28, 2014, and began offering franchises for Applebee's Neighborhood Grill & Bar restaurants in the U.S. and abroad starting October 1, 2014. The company is a wholly-owned subsidiary of Applebee's Funding LLC, which is part of Dine Brands Global, Inc. Dine Brands Global (formerly DineEquity, Inc.) acquired Applebee's International, Inc., the original owner and franchisor of the Applebee's chain, on November 29, 2007. Prior to the current entity, various affiliated entities, including Applebee's International, Inc. and Applebee's Franchising, LLC, offered domestic franchises from 1988 until September 2014. Dine Brands Global also oversees the IHOP and Fuzzy's Taco Shop franchise systems.
Financial Overview
Investment Range
$1,766,798 - $5,822,933
Franchise Fee (Low)
$35,000
Franchise Fee (High)
$50,000
Royalty %
4%
Marketing %
4.25%
Equipment Costs (Low)
$2,220,952
Equipment Costs (High)
$2,820,307
Working Capital
$427,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Applebee's Franchisor LLC, the direct franchisor, appears to be in a stable financial position with positive net income and operating cash flow. The company also has strong positive working capital, meaning it has more than enough current assets to cover its current debts. However, it's important to know that Applebee's Franchisor LLC operates as a special purpose entity within a larger securitization structure. It has lent a significant amount of money, $25 million in total, to its parent company, Dine Brands Global, Inc., which is currently classified as an asset on Applebee's Franchisor LLC's balance sheet but won't be settled until the securitization is dissolved. This means that particular cash isn't immediately available. Dine Brands Global, Inc., the parent company of Applebee's, shows some financial challenges. Its overall revenues have been declining from 2022 to 2024, and net income also decreased from 2023 to 2024. A key concern is that Dine Brands Global, Inc. consistently has negative working capital and a substantial stockholders' deficit. This means its short-term debts are greater than its short-term assets, and its total liabilities are greater than its total assets, which can be a red flag for financial stability. In 2024, the company reported a $7.1 million impairment loss on its Fuzzy's Taco Shop franchise unit, indicating difficulties within one of its other brands. Additionally, Dine Brands Global, Inc. carries a substantial amount of long-term debt and has significant contingent liabilities from lease guarantees, totaling approximately $345 million in 2024, which could impact its financial health. The parent company also relies heavily on a few large franchisees for a notable portion of its consolidated revenue.
Financing Details
Applebee's Franchisor LLC does not offer any direct or indirect financing to its franchisees, nor does it guarantee any franchisee's notes, leases, or other financial obligations. Franchisees will need to arrange their own funding.
Performance Metrics
Total US Locations
1,510
Franchised Units
1,463
Corporate Units
47
Avg Square Footage
4,955
Franchising Since
2014
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
Yes
Litigation Count
10
Litigation Summary
Applebee's has disclosed ten legal disputes. Four of these cases are currently ongoing and were filed in 2024 or 2025, within the last three years. These pending cases involve Applebee's suing franchisees or their guarantors for breach of contract related to unauthorized restaurant closures and failure to pay fees, and a bankruptcy proceeding for several franchisees with claims threatened against Applebee's. The six concluded cases, which spanned from 2011 to 2021, included various disputes. There was a trademark infringement lawsuit regarding promotional drinks, settled for $320,000. An ADA class action concerning Braille on gift cards was settled for $7,000. A trademark dispute over a sugar substitute resulted in a settlement where it became an exclusive tabletop sweetener. Applebee's pursued two collection actions against franchisees; one was dismissed, and another settled for over $14 million. Lastly, a class action alleging non-disclosure of beverage prices on menus was dismissed.
Bankruptcy History
Vance Chang, the Chief Financial Officer of Applebee's, was previously the Chief Financial Officer of YogaWorks, Inc. YogaWorks filed for Chapter 11 bankruptcy in October 2020 due to business pressures related to COVID-19.
Agreement Terms
Initial Term
20 years
Renewal Term
5 years
Renewal Conditions
To renew their Applebee's franchise, franchisees must ensure all their Applebee's restaurants are in good standing with Applebee's. They must sign a new franchise agreement, which may have materially different terms and conditions from their original agreement. Applebee's franchisees are also required to pay a renewal fee equal to 10% of the initial franchise fee paid by new franchisees at that time. Additionally, they must provide written notice to Applebee's between seven and twelve months before their current agreement expires, indicating their desire to renew.
Training & Support Program
Franchisor Assistance
Before opening an Applebee's restaurant, Applebee's provides franchisees with an orientation session and access to comprehensive Manuals covering brand standards, recipes, operations, and training guides. Applebee's assists with site selection by providing demographic information, conducting optional on-site inspections, and reviewing lease/purchase agreements. They also provide prototype architectural and engineering plans. For a new Applebee's franchisee's first restaurant, Applebee's provides up to eight training personnel for approximately 14 days around the opening. For existing franchisees opening new Applebee's restaurants, financial assistance is provided to cover the cost of up to eight training personnel for up to 14 days, though the franchisee hires the personnel. Applebee's also trains the franchisee's Leader of Operations and up to four restaurant managers (General, Kitchen, and Assistant Managers) through an in-store, performance-based program. After opening, Applebee's offers ongoing advice and assistance in restaurant operations, management, food and beverage preparation, safety, sales promotion, and service concepts through various channels like visits, materials, meetings, and training sessions. Representatives visit the Applebee's restaurants at least once yearly for consultations and inspections, with additional visits at Applebee's discretion. Key management personnel are required to attend refresher courses periodically. Applebee's continuously develops and tests new menu items, which are integrated into promotional campaigns several times a year, and franchisees must implement these. Applebee's directs national advertising programs and approves all local advertising materials used by franchisees. For technology support, Applebee's franchisees have the option to purchase Help Desk services from Dine Brands for an annual fee. Additionally, food safety performance is routinely evaluated twice a year by an independent third party, with Applebee's covering the routine costs in 2025 (subject to change in 2026), but reaudit costs for failed evaluations are billed to the franchisee.
Initial Training Hours
400
Training Location
Franchisee's designated location
Ongoing Support
After the Applebee's restaurant opens, Applebee's provides ongoing advice and assistance on operations, management, food and beverage preparation, safety, sales promotion, and service concepts through various channels like visits, materials, meetings, and training sessions. Applebee's representatives conduct at least yearly on-site visits for consultations and inspections, with additional visits at Applebee's discretion. Key management personnel, including the Leader of Operations, General Managers, Kitchen Managers, and Assistant Managers, are required to attend refresher courses as reasonably requested by Applebee's. Applebee's continuously develops and tests new menu items, which are integrated into promotional campaigns several times a year, and franchisees must comply with these changes. Applebee's also directs national advertising programs and approves all local advertising materials used by franchisees. For technology support, Applebee's franchisees have the option to purchase Help Desk services from Dine Brands for an annual fee. Additionally, food safety performance is routinely evaluated twice a year by an independent third party, with Applebee's covering the routine costs in 2025 (subject to change in 2026), but reaudit costs for failed evaluations are billed to the franchisee.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Absentee Allowed
Territory Type
limited
Territory Size Requirements
Applebee's defines the territory for a development agreement as a specific geographic area, with a written description and/or map provided before signing. The number of restaurants a franchisee must develop is determined based on the territory's population, income, and development potential. For an individual Applebee's restaurant, the protected area is the lesser of a three-mile radius from the restaurant or a radius that includes either a residential or daytime population of 40,000 or more people. This protected radius has exceptions for locations across international borders or in certain non-traditional venues like airports or stadiums. The overall 'Minimum Development Potential' for a territory is calculated using 'Area of Dominant Influence' (A.D.I.) markets, categorized by 'Income Qualified Metro Households': Small Market (less than 135,000), Medium Market (135,000 to 399,999), Large Market (400,000 to 1,399,999), and Mega Market (1,400,000 or more). Counties within these A.D.I. Markets are further classified by total population: Metropolitan (> 50,000), Small Town (20,000 to 50,000), and Other (< 20,000).
Staffing Notes
Applebee's requires each franchisee to employ a full-time Leader of Operations for their restaurants in the territory, who may also be a Principal Shareholder if they have sufficient restaurant experience. This individual must reside in the market area and successfully complete the franchisor's operations training course and any required refresher courses. Their designation is subject to Applebee's written approval. For each Applebee's restaurant, a full-time General Manager is required to oversee day-to-day operations, and a full-time Kitchen Manager to supervise kitchen operations. Assistant Managers are also required. These managers must successfully complete Applebee's operations training and any refresher courses. Additionally, all Restaurant Team Members must be fully trained, and staffing levels should be adequate to meet sales volumes. Roles for Team Members include Host, Server, Bartender, To Go specialist, various Cook positions (Fry, Mid, Grill, Prep), Expo, and General Utility. The Manager on Duty or Person in Charge must hold a ServSafe or equivalent food safety manager certification. For new franchisees opening their first Applebee's restaurant, the franchisor provides up to eight training personnel for 14 days (eight before and six after opening). For existing franchisees opening new locations, financial assistance is provided for up to eight training personnel for up to 14 days, with the franchisee responsible for providing the trainers.