Applebee’s Nears Goal Of Being Fully Franchised Operation

The shift to an all-franchise model is nearly complete. DineEquity has sold another 65 of its Applebee’s restaurants for $61 million, one of its final steps in converting the chain to a franchised operation. With the sale of the stores, all in Michigan, to an operator in that state, DineEquity has sold or reached deals to sell almost all of the 510 U.S. Applebee’s restaurants it acquired when it bought the chain in 2007. When the Michigan sale and two other pending deals close later this year, 99% of Applebee’s units will be franchised.

The Glendale, Calif., company also owns the IHOP restaurant chain, which is all franchised. DineEquity is betting that an all-franchise model will decrease the volatility of its cash flow and require less capital. Selling the Michigan restaurants will reduce its sale-leaseback-related financing obligations by about $38 million, and DineEquity expects the sale to result in $2.6 million in annual general and administrative savings.