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I have heard from a very strong source that the Applebee’s franchisees are restless. Apparently, the franchisees have formed and capitalized a new group – The Franchise Business council. To be clear this is different from the Franchise advisory council which has been in place for years.

The new Franchise Business council has been formed to help set the proper direction for the company. Essentially, the Applebee’s franchisees are very unhappy with the company’s strategies. They are choking on the bottom feeder, all-you can eat promotions that are being set by the home office.

I believe the franchisee uneasiness stems from when the current CEO of DIN, Julia Stewart, was president of Applebee’s - from October 1998 to August 2001. Her departure from the company was controversial at the time so it’s not completely surprising that the franchise community is restless over the current direction of the company. Unfortunately, there is not much they can do.

The only thing I see them doing is working with the largest shareholders to force a coup d’état…… The top four shareholders control 62% of this company. With the stock trading at $16, the market believes that the company’s liquidity fears are now over. I think not. Management pulled a rabbit out of the hat in Q3 by announcing its asset purchase agreements for the sale of 66 stores. From where I sit, these sales only raise more questions and did not solve the liquidity issues. As the stock heads back down to $6 confidence in management will wane.

I’m sure we will be reading about this in the WSJ before long.