Applebee’s has taken a step back into restaurant ownership with the purchase of 69 locations from a North Carolina franchisee, marking the first company-owned restaurants in the Applebee’s system in three years.
The company said Friday it had closed on a deal to buy 69 Applebee’s from Raleigh, N.C., franchisee Apple Gold Group. The restaurants, which are located in North and South Carolina, will be operated by Applebee’s COO Kevin Carroll.
The deal creates the first company-owned restaurants in the Applebee’s system since 2015.
For now, the restaurants will remain the only company stores in the chain, the Glendale, Calif.-based company said, adding that it would not rule out refranchising the stores in the future.
Apple Gold could not be reached for comment on the deal.
The move comes amid the end of a monthslong legal dispute between Applebee’s and bankrupt franchisee RMH Franchise Holdings Inc., during which the company had said it was “willing and able to start the process of taking over restaurants, should that be the right resolution.”
The settlement, announced Friday, called for RMH, the brand’s second-largest franchisee, to pay the franchisor all past due royalty and advertising fees, which were at the center of the legal dispute. Applebee’s will also receive reimbursement for termination fees tied to restaurant closures.
Glendale, Calif.-based Dine Brands did not disclose the value of the settlement with the Atlanta-based franchisee.
RMH said it would “retain ownership of all of its 135 restaurants” as a result of the settlement, did would not disclose any additional details.
According to the Wall Street Journal the settlement included a $12.5 million payment and an agreement not to close more than five additional locations.
All other outstanding litigation between the two companies have been dismissed, Dine Brands said.
"We're pleased to have come to a resolution with RMH and its owners," Applebee’s president John Cywinski said in a statement. "We remain confident and look forward to 2019."
Applebee’s parent initially sought control of RMH’s 146 Applebee’s restaurants, arguing the struggling franchisee, who filed for Ch. 11 bankruptcy in May, had effectively terminated its contract by refusing to pay royalty fees.
But in the fall, a court ruled the franchisee can continue to operate its Applebee’s locations.
As of its latest quarterly report, Applebee’s had more than 1,856 franchise restaurants. Of those, 1,707 operated in the U.S. For the nine months ended Sept. 30, Applebee’s franchisees closed 85 restaurants and opened five.
In the third quarter, Applebee's domestic system-wide same-restaurant sales increased 7.7 percent.
Contact Nancy Luna at [email protected]
Follow her on Twitter: @fastfoodmaven
