Applebee’s Franchise Costs $2.4M – $7.1M (+ 2024 Profits)

Applebee’s, launched in 1980 in Decatur, Georgia, has grown from a local eatery to a global casual dining giant within Dine Brands Global’s portfolio. Known for its neighborhood grill concept, it offers a diverse menu appealing to a wide audience. 

Applebee’s franchising, initiated soon after its inception, has been pivotal in its growth, inviting entrepreneurs to partake in its success story. The headquarters, now in Glendale, California, symbolizes its journey from a local favorite to an international dining destination.

Applebee’s differentiates itself in the highly competitive casual dining market through its commitment to serving classic bar and grill dishes crafted from high-quality ingredients. The brand prides itself on offering these culinary delights at reasonable prices, coupled with genuine hospitality and service that makes every visit memorable.

Type of Expenditure	Amount
Initial Organizational and Training Expenses	$75,000 – $120,000
Building Costs	$810,000 – $2,310,000
Site Work	$375,000 – $1,250,000
Professional Services	$64,000 – $230,000
Permits/Fees (See below for Liquor License)	$35,000 – $105,000
POS System	$17,000 – $45,000
POS System License Fees	$4,020 – $8,120
Kitchen Display System	$1,500 – $2,400
Initial Inventory	$25,500 – $47,300
Pre-Opening Expenses (insurance, legal, accounting, personnel and training expenses)	$55,000 – $350,000
Applicant’s Fee	$0 – $15,000
Franchise Fee Deposit	$0 – $10,000
Initial Franchise Fee	$35,000
Initial Advertising Expense	$5,000 – $40,000
Liquor License(s)	$500 – $1,000,000
Apple Supply Chain Co-op Stock Purchase	$0 – $100
Server Tablet Maintenance Fee	$420 per year
Menu Management Platform Fee	$90 – $180 per month per Restaurant
ShiftOne	$30/month or $360 per year
Campaign/Menu Training	$30 per year
Operating Expenses During First Three Months	$405,000 – $655,000
TOTAL	$2,428,029 – $7,084,006

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Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

You must pay an initial franchise fee of $35,000 for each Restaurant you open during the initial development periods of the Development Agreement. This fee is allocated equally toward each Restaurant you open on a timely basis. If a transfer occurs between franchisees, the initial franchise fee may be reduced, deferred, or waived, although transfer fees may apply.

Royalty Fee

The royalty fee is 4% of Gross Sales. This fee is payable monthly and is subject to increase by the franchisor.

Advertising Fees

• National Advertising Fund: Currently, you are required to contribute 4.25% of total Gross Sales to the Applebee’s National Advertising Fund. This fee is payable monthly alongside the royalty fee.
• Local Advertising: As of now, there is no required local advertising fee through December 31, 2024. Starting January 1, 2025, you will be required to spend a minimum amount equal to 0.5% of total Gross Sales on local promotional activities.

Technology-Related Fees

• Applebee’s POS Software License Fee: The current license fee for the Applebee’s Point-of-Sale software is $2,500 per site, covering A1POS and A1Cards software components.
• Applebee’s POS Software Maintenance Fee: An annual maintenance fee of up to $825 per Restaurant is charged for the A1POS and A1Cards software. Additionally, if server tablets are deployed, there is an annual maintenance fee of up to $420 per Restaurant.

Additional Fees

• Menu Management Platform Fee: Ranges from $90 to $180 per month per Restaurant.
• Customer Relationship Management (CRM) Fee: Between $125 to $150 per month per Restaurant.
• Digital Products Service Fee: A guest relations chargeback fee and independent audit fee reimbursement costs are applicable as per the services availed.

Miscellaneous Fees

• Renewal of Franchise Agreement: For each five-year renewal period, the fee is 10% of the initial franchise fee at the time of renewal (currently $3,500).
• Transfer Fee: A fee of $2,500 per Restaurant is applicable before the closing of the transfer.
• Compliance Audit Fee and Interest: Applicable for interest on unpaid fees and audit costs if an audit shows an understatement of at least 3% of Gross Sales for any month.

franchise Pros and cons

Operating an Applebee’s franchise has its pros and cons.

Pros

• Brand popularity: Applebee’s is a famous brand, especially because of its culture of main American dishes. Customers who know Applebee’s will flock to any newly launched restaurant to enjoy its popular menu.
• Franchise support: franchisees benefit from the franchisor’s support on site selection, construction, and restaurant design
• Comprehensive training: to make sure that franchisees understand and implement Applebee’s concept correctly, the franchisor offers a detailed 10–12 weeks of training. The training program covers basic restaurant management and operations programs for the directors, general managers, supervisory employees, and kitchen managers.
• Expansion plans: The brand has established its presence in the domestic and international markets. It also has solid plans to accelerate its international growth. Franchisees looking to be part of the chain’s restaurants can easily venture into new markets.

Cons

• No financing: the franchisor does not provide any direct or indirect financing. Franchisees have to resort to third-party financing, for instance, through the SBA, to fund their restaurant establishment or expansion.
• Limited menu for vegetarians: the Applebee’s franchise may not be a good option for customers looking for healthy and vegetarian eating options.
• No exclusive territory protection: the franchisor does not offer their franchisees exclusive territories. It grants franchisees the right to operate their restaurants at a single, specific location. Therefore, franchisees may face competition from franchises granted by the franchisor or from competitive brands that the franchisor controls.

How to apply

Opening a Applebee’s franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Applebee’s franchise.

1. Conduct Preliminary Research

• Explore the Applebee’s franchise website for initial information.
• Understand the brand’s market position and competition.
• Assess your local area for demand and suitable locations.

2. Review Financial Requirements

• Investigate the initial investment needed, which includes franchise fees, construction costs, and operating capital.
• Examine the financial performance of existing franchises to gauge potential returns.
• Assess your financial capability to meet the investment and ongoing operational costs.

3. Submit an Application

• Complete the franchise application form provided by Applebee’s.
• Include detailed information about your business background, financial status, and any previous experience in the restaurant industry.
• Prepare for a comprehensive review by the Applebee’s franchising team.

4. Attend Discovery Day

• If your application progresses, you’ll be invited to a Discovery Day at Applebee’s headquarters.
• Use this opportunity to meet the corporate team, ask questions, and understand the brand’s culture and expectations.
• Evaluate the support system offered by the franchise, including training, marketing, and operational assistance.

5. Secure Financing

• Finalize your business plan, clearly outlining your strategy for success.
• Approach banks or financial institutions with experience in franchise financing.
• Consider SBA loans or franchisor-assisted financing options, if available.

6. Find a Suitable Location

• Work with Applebee’s real estate team to identify a strategic location for your franchise.
• Consider factors like visibility, accessibility, local competition, and target demographic.
• Ensure the location meets Applebee’s site selection criteria and has potential for high foot traffic.

7. Sign the Franchise Agreement

• Once a location is approved, you’ll be presented with a franchise agreement.
• Review this legal document carefully, preferably with the assistance of a lawyer experienced in franchise agreements.
• Understand your rights, obligations, and the term of the franchise agreement.

8. Complete Training Program

• Participate in Applebee’s comprehensive training program for franchisees and key staff members.
• Training typically covers operational procedures, customer service, food safety, and business management.
• Use this opportunity to fully grasp the operational standards and service ethos of Applebee’s.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

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