Applebee's is suing its Kansas City area franchise owner over the abrupt closing of the restaurant at Independence Center following a racial profiling incident that drew national attention.
The restaurant chain claimed "significant brand and reputational damage" from the "controversial and high-profile circumstances of the closure" of that store and six others by the Kansas City area franchise holder.
The Independence restaurant closed in February after two customers were racially profiled. A video of the incident showed the women being accused by restaurant staff of not paying their bill from the previous night and an Independence police officer mocking and laughing at her.
A video of the incident was viewed millions of times.
The restaurant closed temporarily after the incident, and employees were told three days later that it would remain closed permanently.
None of the restaurant closings was approved by Applebee's, said the lawsuit in U.S. District Court in Kansas City, Kan. Their closings "left a trail of vacant buildings throughout the Kansas City area that the general public previously recognized as bustling and active Applebee’s restaurants," the lawsuit said.
Furthermore, Applebee's wants $6.5 million in unpaid royalties and advertising fees that it says the franchisee failed to pay, and "phantom" royalties and ad fees the restaurants would have generated had they remained open. Its lawsuit seeks $11 million in total damages.
Applebee's sued William J. Georgas of Greenwich, Conn., whom it identified as a principal shareholder of Apple Central KC LLC and Apple Central LLC, which operated the seven closed locations. It said Georgas personally guaranteed obligations of the franchisee businesses, which were not named as defendants in the lawsuit.
“This filing was made based on a long-standing breach of contract against an individual and is not dependent on a particular incident, rather the closing of seven restaurants as well as failure to pay rent, advertising fees and royalties,” Applebee's said in an emailed statement.
The company also pointed out the lawsuit is against Georgas and not the franchisee operating the Kansas City area restaurants.
Steven B. Steinmetz, an attorney representing Georgas, said in an email that the lawsuit had surprised his client and that his client "fully and firmly believes that the matter will be disposed of promptly."
Apple Central KC is paying royalty and advertising fees on its Applebee's restaurants in the Kansas City area that are still operating and "remains committed" to the market, its employees and customers, the email said.
In addition to the Independence closing, the suit challenged closings of Applebee's restaurants in Lee's Summit, Olathe, Lawrence and three in Kansas City — at 13201 State Line Road, 1046 W. 103rd St. in Watts Mill Plaza and 8350 N. Church Road.
The Applebee's lawsuit said that the local franchisee "unilaterally closed the restaurants without Applebee’s consent and stopped paying royalties and advertising fees to Applebee’s."
Georgas, who also is CEO of Apple Central KC, had told The Star last year that he was updating many of his group's more than 20 area Applebee's restaurants, though he acknowledged closing the Lee's Summit, North Church Road and State Line Road restaurants.
The website for Applebee's lists 19 restaurants in the Kansas City area.
In a second federal lawsuit, Applebee's seeks $20 million in unpaid royalty and advertising fees from another franchisee that it also said had "improperly closed" 14 of its 159 Applebee's restaurants.
RMH Franchise Group, named in the lawsuit filed Tuesday, filed for bankruptcy court protection from its creditors the same day. An Associated Press report said its restaurants include an Applebee's in Topeka as well as restaurants in Emporia and Manhattan, Kan.
Applebee's Neighborhood Grill & Bar got its start in Atlanta in 1980. Kansas City businessman Abe J. Gustin Jr. bought 45 restaurants and then launched the nationwide chain from the company he founded in 1988.
Applebee's International was purchased by IHOP in 2007 to form the current parent company Dine Equity in Glendale, Calif., which recently changed its name to Dine Brands Global. Applebee's moved its headquarters to Glendale in 2015.
Dine Brands has been closing scores of Applebee's restaurants in an effort to improve its financial results.