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Applebee’s Franchise Cost & Fees

Date of Incorporation: 1980
Franchising Since: 1983
Headquarters: Kansas City, Missouri

Business Description: Applebee's Franchising LLC is the franchisor. The franchisor offers franchises for restaurants utilizing the service marks Applebee's Neighborhood Grill & Bar and Applebee's Grill and specializing in the sale of uniform, high quality, moderately priced food and alcoholic beverages in a distinctive, casual setting.

Franchise Offer: The franchisee will operate sit-down, table service restaurants, including the service of food and alcoholic beverages, under the trade name of Applebee's Neighborhood Grill & Bar.

Financial Assistance: Applebee’s Franchising LLC does not offer direct or indirect financing, nor does it guarantee the franchisee’s note, lease or obligation.

Training and Assistance: Applebee’s Franchising LLC provides a basic Restaurant management and operations program for Directors of Operations, other persons with development or supervisory responsibility over more than one Restaurant, General Managers, Kitchen Managers, Assistant Managers and other Restaurant managers at one of the franchisor’s Restaurants or that of a franchisee. The current training program for management includes in-store, performance-based, task-oriented training. The training covers the following functions: server/expo, host/hostess, bartender, Carside-To-Go specialist, kitchen operation, management and administration. Before the opening of the Restaurant and for approximately one week after the Restaurant opens, Applebee’s Franchising LLC provides a basic training program for the non-management Restaurant employees. This program includes in-store, task-oriented training. Training is provided for the following restaurant functions: Host, Server, Bartender, Carside-To-Go specialist, Mid Cook, Broil Cook, Fry Cook and Prep/Expo. Applebee’s Franchising LLC can offer refresher courses regarding the Restaurant operations which, on its request, the Director of Operations, supervisory employees, General Managers, Kitchen Managers and Assistant Managers must successfully complete to its satisfaction.

Territory: Under each Franchise Agreement, the franchisor allows the franchisee to operate a Restaurant at the single specific location described in the Franchise Agreement. The franchisor must approve the location of the Restaurant in advance. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls.

Term of Agreement and Renewal: The length of the franchise term is for 1 to 20 years. There is no provision given for renewal.

Obligations and Restrictions: Under each Franchise Agreement, the franchisee must employ a General Manager who will devote his/her full-time efforts to supervising the day-to-day operation of each Restaurant and a Kitchen Manager who will devote his/her full-time efforts to supervising the day-to¬-day operation of the Restaurant kitchen. The General Manager, Kitchen Manager and Assistant Managers for each Restaurant must successfully complete the operations training course before the opening of the Restaurant for which they are responsible (and after the restaurant opens, as the franchisee hires each new manager) and must successfully complete any refresher courses the franchisor requires. The franchisee may offer for sale in the Restaurants only those products and services specified in the Franchise Agreement and the Manuals which satisfy the franchisor’s standards and specifications and which the franchisee purchases from approved suppliers. The franchisee may not use the Restaurant location for any purpose other than the operation of a Restaurant complying with the franchisor’s requirements, and the franchisee may only advertise locally through media the franchisor approves. The franchisee may not enter into any lease or other agreement which imposes restrictions on the franchisee’s (or the franchisor’s) right to operate additional Restaurants at any particular location, and the franchisor must approve in advance any purchase contract or lease the franchisee enters.

Estimated Number of Units: 2,035

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Organizational and Training Expenses (incorporation, legal and accounting fees, training, site location and miscellaneous expenses) $75,000 $120,000
Purchase of Land $272,000 $1,450,000
Building Costs (purchase, construction, remodeling, etc.) $556,000 $2,600,000
Site Work $50,000 $500,000
Professional Services $30,000 $211,000
Permits/Fees (See below for Liquor License) $1,500 $75,000
Furniture, Fixtures, Equipment and Signage $410,000 $750,000
Point Of Sale System $20,000 $35,000
Smallwares (dishes, silverware, other utensils, etc.) $25,000 $35,000
Initial Inventory $25,500 $47,300
Pre-Opening Expenses (insurance, legal, accounting, personnel and training expenses) $55,000 $100,000
Initial Franchise Fee $35,000 $35,000
Initial Advertising Expense $5,000 $40,000
Liquor License(s) $500 $400,000
Apple Supply Chain Co-op Stock Purchase $100 $100
Additional Funds - 3 Months $405,000 $655,000
ESTIMATED TOTAL $1,965,600 $7,053,400
Other Fees
Type of Fee Amount
Royalty 4% of Gross Sales. This percentage can be increased by the franchisor after January 1st, 2020.
Advertising (National Advertising Fund) Currently, 3.25% of total gross sales. This percentage can be increased or decreased at any time.
Cooperative Advertising Maximum 0.5% of total Gross Sales. Any amounts paid to an Advertising Cooperative will reduce the amount required to be spent on Local Market Advertising on a dollar for dollar basis.
Late Fee Up to 18% interest or highest rate allowed by law.
Campaign/Menu Training $3-$5 per campaign/menu implementation.
E-Learning Approximately $6 per disk; approximately $36 per year per restaurant for cost of shared maintenance and updates.
Supplier/Distributor Approval Costs of sample testing plus other actual costs, such as facility inspection.
Extra Manuals $5 - $250
Audit Fee (Balance Sheet and Profit & Loss Preparations) Amount paid by franchisor.
Compliance Audit Fee Cost of audit plus interest on unpaid royalties.
Insurance Cost of insurance and any late fee.
Site Development $150-$450
National Gift Card Program Charges Currently, 8.65% of the redeemed portion of gift cards sold in the national program.
Renewal of Franchise Agreement Currently $3,500 each five-year renewal period.
Applebee’s POS Software License Fee Applebee’s Point of Sale license is currently $1,500 per site. This includes the A1POS and A1 Cards software components.
Applebee's POS Software Maintenance Fee An annual maintenance fee of $825 per Restaurant is currently charged for the Applebee's POS and A1 Cards software.
Gateway Processing Fee An annual subscription fee of $400 per Restaurant is currently charged for ongoing processing services within A1 Cards. Additional fees for processing over dial-up may also apply and will vary based upon usage.
DineEquity Restaurant Solution Center (Help Desk) Annual costs range from $1,200-$1,700 per Restaurant, based on actual products supported. Additional services, such as network consulting, technology rollouts and menu and software configuration, are available for additional project fees.
De-identification After Termination Reimbursement of costs.
Personal Property Removal Fee Reimbursement of costs.
Transfer Fee Up to $2,500 per agreement.
Indemnification Amount of costs.
Unsuccessful Party Legal Fees Amount of fees.
Team Member Hiring ("Poaching") With consent, reimbursement of up to 50% of associate's annual salary. Without consent, 3 times annual salary of employee plus costs and attorneys' fees.
Guest Relations Chargeback Reimbursement of costs.
Government Relations Fund $200 per Restaurant per year recommended.
Creative Services Graphic Design Jobs $75 per hour.

The above information has been taken from the FDD of Applebee’s. Year of FDD: 2016

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