A group of Applebee’s franchisee subsidiaries filed a lawsuit against the franchisor, alleging breach of contract tied to the rollout of dual-branded Applebee’s-IHOP locations.
The complaint, filed in the U.S. District Court for the District of Kansas, comes from Apple Texas Restaurants, Apple Houston Restaurants, Apple Cal, and Apple Vir, which are collectively owned by SSCP Management and based in Texas, California, and Virginia. The entities operate about 70 restaurants combined.
The plaintiffs claim they were granted exclusive rights to develop and operate Applebee’s restaurants within designated territories and that the franchisor was “contractually prohibited from authorizing Applebee’s restaurants owned by parties other than Plaintiffs to be opened and operated in Plaintiffs’ areas of exclusivity.”
According to the filing, the dispute centers on the franchisor’s plans to expand dual-branded Applebee’s-IHOP units, which the plaintiffs allege are being placed within those protected territories. The lawsuit states the franchisor “has announced their intent to allow other franchisees to open multiple dual-brand Applebee’s-IHOP locations in Plaintiffs’ exclusive territories,” and points to a location that opened in Euless, Texas, along with additional proposed sites in nearby markets.
The Applebee’s-IHOP dual-branded concept began internationally before arriving in the U.S. in early 2025. The format has become parent company Dine Brands’ most aggressive growth driver. There are now 32 dual-branded prototypes in the country, including three that are company-owned. These stores achieve 1.5 to 2.5 times higher revenue than single-brand locations and come with payback periods of less than three years. Dine expects to open at least 50 domestic dual-branded stores in 2026.
However, the franchisee entities argue that these openings create direct competition and will erode their business and that “a competing Applebee’s restaurant operating in either territory exclusively belonging to Plaintiffs is diverting and will continue to divert customers and revenues from the nearby Applebee’s locations operated by Plaintiffs.”
The lawsuit also alleges that tensions escalated after the franchisee entities raised objections. “Apple Texas and Apple Houston have been forced to bring this action because Defendants have flouted and breached their contractual obligations,” the complaint states, adding that the franchisor “have threatened to terminate their Franchise Agreements” after the franchisees sought to enforce their exclusivity rights.
That threat materialized in April, when Applebee’s issued a Notice of Default tied to the franchisee entities’ connection to Logan’s Roadhouse. SSCP—also the parent of Cicis Pizza, Corner Bakery, and fine-dining concept Roy’s—quietly acquired the steakhouse from SPB Hospitality.
The notice required the operators to “cease all involvement in the operation, management, or ownership of Logan’s Roadhouse or any other Competitive Business” or risk termination of their franchise agreements.
The plaintiffs argue the noncompete claim is unfounded and contend that Logan’s “operates under a vastly different model than Applebee’s,” with differences in menu, format, and operating hours. They further allege that the franchisor has allowed other franchisees to operate similar or even more directly competitive concepts without enforcement, calling the action selective.
The filing warns that termination would have significant operational consequences, including “the immediate cessation of approximately 70 restaurant operations” and “the displacement of thousands of employees,” along with the loss of a franchise enterprise representing more than $150 million in investment.
The franchisee entities are seeking court declarations affirming that their development agreements remain valid and enforceable, as well as injunctive relief to prevent additional dual-branded locations from opening within their territories and to block any termination of their franchise agreements while the case proceeds.
The plaintiffs’ agreements date back to acquisitions completed in 2008 and 2012, and the lawsuit states the parties operated under those contracts “without issue until mid-2025,” when the franchisor began pursuing dual-brand expansion.
