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Downsizing Restaurants Improves Sale Value

J.S. Held Acquires Shechter & Everett to Expand Forensic Accounting Capabilities for Family Law Disputes in Florida

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The Situation

110 Restaurant Applebee’s Franchisee, $185 million sales, $75 million debt

  • The Company is generating $3 million EBITDA and is unable to service $75 million of debt.
  • 20 restaurants in a loss position.
  • The Applebee’s brand has been in a multi-year decline.
  • Over $10 million in delinquent Royalty and Advertising payments to the Franchisor.
  • The franchisor demanded a Franchisor-directed sale that would result in a $20 million loss to the bank group and trigger various personal guarantees by the Owner.
  • The owner is giving lip service to taking decisive action.

How We Advised

Our experts were engaged as CRO over the Franchisor's objection

  • Cash projections were developed, which demonstrated the company had the ability to pay partial royalty fees.
  • The Company closed approximately 20 restaurants with Franchisor approval, resulting in a $4 million improvement in EBITDA.
  • Negotiated early lease termination payments with approximately 10 landlords.
  • The structured sale process started with a restaurant industry investment banker.
  • Started the sale of company-owned restaurant properties.
  • The Company was sold in two out-of-court sale transactions.
  • Banks will get 100% loan recovery.
  • The owner avoided any significant losses due to the potential enforcement of the personal guarantee.
  • The Company avoided bankruptcy.
  • Approximately 2,000 jobs were preserved.
  • All trade creditors and employees are paid in full.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

Related Practice Areas

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