DineEquity Inc., the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, agreed to sell 33 Applebee's company-operated restaurants primarily in Missouri and Indiana to American Franchise Capital LLC.
This deal comes two weeks after a similar agreement to sell 39 company-operated Applebee's in Virginia to Potomac Family Dining Group LLC.
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The American Franchise transaction is expected to result in net proceeds after taxes of $26 million and reduce DineEquity's sale-leaseback related financing obligations by $22 million.
The Potomac Family Dining transaction is expected to result in net proceeds of approximately $25 million and reduce DineEquity's sale-leaseback related financing obligations by approximately $40 million. To date, DineEquity has sold a total of 342 Applebee's company-operated restaurants since its acquisition of Applebee's International in November 2007.
Julia A. Stewart, chairman and CEO of DineEquity, called the sales "another significant step in our strategy to transition to a 99% franchised restaurant system."
DineEquity said it believes that its increasingly franchised business model is less capital intensive and experiences less volatility in cash flow performance compared to the operation of company-operated restaurants.
American Franchise Capital LLC was formed by William Georgas and Trevor Ganshaw for the purpose of acquiring high-end restaurant franchises in the U.S. and Canada.
Potomac Family Dining Group was established by investment banking veteran Timothy M. George in 2010 to facilitate the acquisition of 30 Applebee's Neighborhood Bar & Grill restaurants located in Washington D.C. and surrounding areas.
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