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FranchiseVerdict
AStrongest tier68/100

Applebee's (t. J.) Neighborhoo: Litigation & Risk

Full-Service Restaurants · FDD Items 3, 4 & 5

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Elevated Risk

7 cases disclosed in FDD Items 3 and 4. Bankruptcy disclosed in Item 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
7
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
Disclosed
Franchisor or officer bankruptcy
Verdict score
68 / 100
FranchiseVerdict composite · higher is better
Rating
A
A / B / C / D / F verdict grade

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
8
Government-backed loans issued
Charge-off rate
N/A
vs 16% franchise average
5-yr charge-off rate
N/A
Defaults
N/A
Loans charged off or defaulted
Total loan volume
$11.8M
Avg loan size
$1.5M
Participating lenders
7

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

Extracted from FDD Item 3

Litigation Detail

2 pending cases: (1) Apple Central KC LLC v. Applebee's Franchisor LLC adversary bankruptcy proceeding re breach of contract, ongoing; (2) Applebee's Franchisor LLC v. Mountain Apple LLC re unpaid royalties, administratively closed/stayed pending franchisee bankruptcy. 5 concluded actions: Applebee's v. William J. Georgas et al. (breach of contract re unauthorized restaurant closures) settled Dec 2025 for $4,000,000 paid TO Applebee's; Vampire Family Brands trademark suit settled for $320,000; Himelda Mendez ADA/Braille class action settled for $7,000; Heartland Consumer Products trademark dispute settled via product-exclusivity agreement; Applebee's v. RMH Franchise Corporation (nonpayment of royalties/fees, RMH bankruptcy) settled for $14,255,326 paid TO Applebee's; Candice Watkins consumer-fraud class action dismissed on appeal (Third Circuit affirmed 2014).

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.