Apple Central KC LLC v. Applebee's Franchisor, LLC, 25-06002

Applebee’s Franchisor, LLC is a franchisor for Applebee’s Grill & Bar, and entered into franchise and lease agreements with Apple Central KC, LLC (the Debtor) from 2015-2017 for eight Kansas City area restaurants.
On October 30, 2024, the Debtor closed several restaurants without Applebee’s consent and ceased paying royalties and fees, leading Applebee’s to file a breach of contract lawsuit in the U.S. District Court and, the same day, the Debtor to file for Chapter 11 bankruptcy.
Applebee’s filed a proof of claim in the bankruptcy case for $10.8M in damages and the Debtor initiated an adversary proceeding in bankruptcy court challenging the proof of claim and alleging breaches by Applebee’s.
Applebee’s sought discretionary abstention—asking the bankruptcy court to defer to the District Court—arguing state law contract claims should be resolved there due to their non-core nature.
The Debtor objected, arguing the claims are core to the bankruptcy, will affect the allowance of claims, and can be efficiently handled by the Bankruptcy Court, where no jury right exists and substantial familiarity with the parties/issues has developed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Should the Bankruptcy Court abstain in favor of District Court?	Bankruptcy court should retain because claims are core and integral to claim allowance.	District Court better suited; state law claims are non-core, advanced in District Court; abstention avoids delay/cost.	Court denied abstention; core issues and efficient administration support retention.
Are the franchise law issues predominately non-core state law?	Not so; resolution underpins bankruptcy claim objections, making them core proceedings.	Yes; breach of contract/good faith claims should be resolved under state law, outside bankruptcy court.	Court found state law issues are linked to proof of claim; thus, remain core.
Will retaining jurisdiction create inefficiency or higher costs?	No; bankruptcy court's familiarity with parties/issues, no jury demand, and unaffected administrative fees support retention.	Yes; district court has relevant background, and abstention will reduce expense/delay.	Court found bankruptcy court retention promotes efficiency, not more cost.
Can contract claims be efficiently severed from bankruptcy claims?	No; franchise claim liability is inextricably tied to the proof of claim process.	Yes; claims could be severed and resolved independently.	Severance inadvisable; intertwined issues better decided jointly by bankruptcy court.

None with official reporter citations included in this opinion; only unpublished and unreported authorities were cited.