One of the initiatives that IHOP's management plans to put intoplace is increasing the number of Applebee's stores operated byfranchisees. Applebee's currently operates 508 corporate-ownedunits, and IHOP executives would like to see that number reduced toless than 5% of the total restaurant count.

"We are strong believers in the pure franchiser model," saidJulia Stewart, IHOP's chairwoman and chief executive officer,during a conference call announcing the deal, which is set to closein the fourth quarter. Going forward, Stewart's team looks to sell40 restaurants per quarter, resulting in $550 million that will beused to pay down debt. The company is also looking at thesale-leaseback of all Applebee's real estate within 12 months,resulting in proceeds of $400 million that will also be used to paydown debt.

Stewart, who was president of Applebee's in the 1990s, says sheexpects to have current Applebee's franchisees, new restaurantowners and possibly IHOP franchisees take part in restaurantacquisitions. Currently 99% of all IHOP restaurants are franchiseeoperated.