FranchiseVerdict
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A48/100FDD 2024

Applebee's Neighborhood Grill & Bar — Litigation & Risk

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

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Elevated Risk

6 cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
6
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. 01MINORNegative unit growth (-2.1% YoY) indicates systemic contraction despite $2.8M average revenue
  2. 02MINORMaterial gap between average revenue ($2.82M) and investment range ($2.43M-$7.08M) suggests highly variable unit performance and profitability uncertainty
  3. 03MINORAbsence of Item 19 (net income disclosure) prevents validation of actual franchisee profitability relative to $2.43M-$7.08M investment
  4. 04HIGHMultiple concluded litigations including consumer fraud class action (Candice Watkins - menu pricing) and ADA compliance failures indicate operational/compliance risks
  5. 05MINOR20-year term locks franchisees into declining system; refranchising trend suggests franchisor may be exiting underperforming markets
  6. 06MINORHigh royalty rate (4%) on declining sales volumes reduces unit-level cash flow recovery potential

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.