Our Standard Approach
Our typical international development agreements require franchisees to build multiple restaurants in a defined geography within a defined period. Usually we require, at a minimum, 3 restaurants.
Our preferred partner is an experienced and well capitalized multi-unit operator who is probably operating restaurants already with another brand. We typically require a minimum of 1MM USD in net worth for each restaurant to be built, along with substantial cash assets, usually a minimum of 1MM USD / 300K USD in cash per restaurant. It is also important our franchisees have sufficient funds to cover working capital costs and startup costs, which are substantial.
Territorial exclusivity is occasionally given, but our willingness to consider exclusivity is dependent on the initial development commitment.
Our Standard Terms
- Royalties/Continuing Fees: The continuing fee for Applebee’s is 4% of sales for the first 24 months of operation. We reserve the right to increase the continuing fee to 5% after 24 months of operation.
- Initial Fee/Franchise Fee: Our current initial fee per store is USD 40K as of August 2014.
- Setup Fees: When we execute a development agreement, we will charge a setup fee to cover the administrative costs of onboarding and setting up a new franchisee. This fee varies by agreement.
- Territorial Fees: We will typically charge a fee for territorial exclusivity.
- Advertising Fee: Franchisees are obligated to spend 4% annual on advertising. Of this 4% of sales; 3.5 ppts are spent locally on marketing; this will be audited by Applebee’s. Another 0.5 ppts will be remitted directly to Applebee’s Inc to cover marketing services and creative costs.
- Training Fees: Franchisees are expected to cover the cost of training their local staff and management teams. This will include the cost of Applebee’s certified trainers who will temporarily work in market and at the store to enable a successful pre-open and restaurant open.