Skip navigation
DineEquity to complete Applebee’s franchising initiative

DineEquity to complete Applebee’s franchising initiative

With sale of 65 restaurants in Michigan, the casual-dining chain is nearly fully franchised

DineEquity Inc. said Wednesday it has agreed to sell 65 Applebee’s restaurants in Michigan, a move that when finalized, will complete the company’s five-year strategy of turning the casual-dining chain into an almost fully franchised brand.

Since acquiring Applebee’s Neighborhood Grill & Bar in 2007, Glendale, Calif.-based DineEquity has sold or entered into agreements to sell all of its 510 domestic company-operated restaurants, except for 23 test market locations the company intends to keep.

Three refranchising deals are still pending, the company said. But once those are finalized in the third or early fourth quarter, Applebee’s will be 99-percent franchise operated. To date, the company has sold 342 domestic locations to franchisees since the brand was acquired.

Julia Stewart, chair and chief executive of DineEquity Inc., which also owns the mostly franchised IHOP family-dining chain, has long argued that the franchise business model is less capital-intensive and experiences less volatility in cash flow performance compared with company-operated restaurants.

“We are excited to reach this very important milestone in our history and realize our strategic goal of transitioning the Applebee’s business model away from company-owned and operated restaurants and toward the pure-play franchisor model we pioneered at IHOP,” Stewart said in a statement.

The deal with franchise operator TSFR Apple Venture LLC for the 65 Michigan restaurants is expected to net about $61 million after taxes and will reduce DineEquity’s sale-leaseback financing obligations by about $38 million.

DineEquity said it expects to pay about $9 million related to the settlement of net working capital liabilities and deal costs. The sale is also expected to result in about $2.6 million in annualized general and administrative savings.

TSFR Apple Venture is part of a family of Michigan-based restaurant companies founded by the Schostak family, lead by Mark Schostak, executive chairman. When the deal closes, the family will own, operate or have an investment in more than 160 restaurants across the quick-service, family-dining and casual-dining segments.

In May, DineEquity revealed two asset purchase agreements: One with Potomac Family Dining Group LLC for the sale of 39 Applebee’s units in Virginia; and a second with American Franchise Capital LLC for 33 restaurants, mostly in Missouri and Indiana.

DineEquity operates or franchises more than 3,500 restaurants in 18 countries between the two brands.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout
 

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish