Restaurants - serious money

I call $1.9 billion serious money. Considering that what it may be used for is even more surprising. Wiggin and Dana's Franchise Law Blog posts a report that this is the asking price for Applebee's. I generally like Applebee's, but it is not a chain I would think would be worth that much money. The Blog's links to the article are dead but here are some more:

• IHOP Buys Applebee?s for $2.1 Billion

• Baby-back ribs, pancakes and a side of real estate

What makes Applebee's valuable is not the pizzaz of its menu but its menu and its real estate. This quote is from the second article:

“The value is in the restaurants and the real estate. You’ve seen this play in Sears-Kmart, Toys R Us and elsewhere. The companies may have problems, but the land they are sitting on still has value and the brand names still have value that can be leveraged,” said one consumer investment banker who declined to be named.

For legal issues, the purchase shows the value of trademarks.

Both the second article and the Blog post remark that IHOP intends to franchise the Applebee's chain. That I find very interesting - if I am understanding IHOP's intentions. Franchising would seem to be a good method to work off some of the debt incurred in the purchase and one that might be a useful tool for similar sales.