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A48/100FDD 2025

Applebee’s Neighborhood Grill & Bar — Litigation & Risk

Food & Beverage - Full Service · FDD Items 3, 4 & 5

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Elevated Risk

10 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
10
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
48 / 100
FranchiseVerdict composite
Rating
STRONG
STRONG / MODERATE / CAUTION / AVOID

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Kansas
State whose law governs disputes — relevant if you're not based there

What drove the 48/100 rating

Risk Score Breakdown

  1. 01MINORDeclining unit count (-7.3% YoY) indicates system contraction and weakening franchisee demand
  2. 02HIGHMultiple breach of contract litigations by franchisor against franchisees (Georgas, Mountain Apple, RMH, Apple Central KC, Louisiana Apple) suggests operational/compliance conflicts or franchisor overreach
  3. 03MINORNo average net income disclosure despite $2.76M average revenue—opaque profitability raises questions about actual franchisee earnings after 4% royalty, rent, labor, and food costs
  4. 04MINORHigh capital requirement ($1.77M–$5.82M) combined with declining system creates elevated risk of underperforming investment
  5. 05MINORUnprotected territory allows franchisor to add competing units, directly cannibalizing franchisee sales
  6. 06MINORMultiple class action and trademark disputes (Mendez, Vampire Family Brands, Watkins) indicate compliance and disclosure issues at corporate level
  7. 07MINOR20-year term lock-in is lengthy given system shrinkage and inability to exit if unit becomes unprofitable

Severity inferred from FDD text — not a regulatory or legal classification

Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.