Applebee’s has sued Apple Central, a Kansas City franchisee that closed eight locations last week before filing for bankruptcy. In its complaint filed in the District of Kansas court, the franchisor alleges the franchisee breached its agreement by closing those locations without consent.
Applebee’s is seeking to recover over $8 million in damages, including $4.476 million for future losses on unpaid royalty and advertising fees and $3.6 million in rent.
Apple Central filed for bankruptcy Oct. 30 while reporting total liabilities between $10 million and $50 million to between 200 and 999 creditors, and assets of between $1 million and $10 million. Its list of creditors include state sales and liquor tax entities, real estate and development entities, and foodservice distributor Sysco, to which it owes more than $339,000.
According to the filing, Apple Central first acquired 23 company-owned Applebee’s in the Kansas City market for $10 million in 2015. The franchisee noted that it lost money during a steak promotion in 2016 and, again, during the pandemic, which it struggled to recover from given ensuing cost pressures and a pullback from consumers.
From 2016 to 2023, Apple Central closed 13 restaurants, including seven in 2018 without the franchisor’s approval, according to reports. Applebee’s sued the franchisee then as well, and also for closing locations without consent. One of those locations was shut down permanently after two black women were falsely accused of not paying their bill. The women said they were racially profiled, and the manager and two other employees were swiftly fired before the restaurant closed about a week later.
Apple Central is hoping to sell or continue operating its remaining two locations in the market — in Blue Springs and Northland, Mo. — through the bankruptcy process.
Earlier this week, Applebee’s reported -5.9% same-store sales in the third quarter, marking its sixth straight quarter of negative same-store sales. The chain has also spent the past couple of years closing underperforming stores.
Contact Alicia Kelso at [email protected]
