The franchisor of Applebee’s Neighborhood Grill & Bar has acquired 69 stores in North and South Carolina from a franchisee while resolving a legal dispute with another operator within the system, RMH Franchise Holdings, over who has legal control of that company's more than 130 units.
Terms of the 69-unit acquisition from Apple Gold were not disclosed.
The deal struck between RMH and Applebee's franchisor, Dine Brands Global, ends months of litigation over each party’s rights and obligations under their franchise relationship. According to Dine Brands, the settlement requires RMH to pay the franchisor all past due royalties and advertising fees, as well as termination charges for store closings. Court documents peg the “cure costs” at $12.5 million.
The purchase of the stores in the Carolinas makes Dine Brands an operator as well as a franchisor of restaurants once again. Applebee’s and Dine’s other restaurant holding, the IHOP family restaurant chain, have both switched in recent years to an asset-light model, where the franchisor does not own or operate more than a restaurant or two for training purposes.
Applebee’s said it intends to continue owning and operating the 69 stores “for the foreseeable future,” but indicated the stores would be refranchised “under favorable circumstances.” Operation of the units will be overseen by Applebee’s COO Kevin Carroll, the chain said. All of the stores are in North and South Carolina.
The purchase and lawsuits settlement coincide with the approval by the U.S. Bankruptcy Court in Wilmington, Del., of RMH’s reorganization plan. RMH filed for Chapter 11 protection from creditors in May.
The reorganization plan reportedly calls in part for RMH to receive an infusion of capital from its owner, private-equity firm Acon Equity Partners. It also permits RMH to close five additional units.
RMH is Applebee’s second-largest franchisee. At the time of its Chapter 11 bankruptcy filing, the company operated more than 160 restaurants. That number has dropped in the months since the company’s bankruptcy filing by about 24 units, according to court documents.
Correction: An earlier version of this story incorrectly identified RMH as the seller of the 69 Applebee's restaurants in North and South Carolina.