Dine Brands Global, the ultimate parent company, along with Applebee’s Restaurants and Applebee’s Franchisor (collectively, “Applebee’s”) filed with the U.S. Bankruptcy Court an objection to RMH Franchise Holdings’ motion to escrow certain franchise fees. The objection asserts, “The Debtors’ license to use Applebee’s trademarks (the ‘Marks’) and right to operate the Applebee’s restaurants was governed by individual franchise agreements (the ‘Franchise Agreements’). The Franchise Agreements required the Debtors to, among other things, pay certain Franchise Fees to Applebee’s as consideration for the use of the Marks….The Adversary Proceeding, however, does not provide a basis to withhold the Franchise Fees owed to Applebee’s. The Debtors cannot have it both ways; they cannot continue to use the Marks based on their theory that the Franchise Agreements are property of these estates and reap the benefits therefrom, but then not pay the Franchise Fees due under the Franchise Agreements…. However, whether the Debtors are using the Marks and benefiting from both the use of Mark and the national advertising because the Franchise Agreements were not terminated (their argument) or because they simply want to continue to benefit from the use of the Mark and the national advertising pending a decision on the status of the Franchise Agreements (Applebee’s argument), the Debtors have to pay the postpetition Franchise Fees as an administrative expense. Thus, the administrative expenses based on the Debtors’ post-petition use of the Marks must be paid to Applebee’s regardless of whether the Court agrees that the Franchise Agreements were terminated pre-petition. Moreover, because of the risk of administrative insolvency, the Debtors should continue to pay Applebee’s all outstanding post-petition Franchise Fees as they come due.”
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