The Rosenberg Center Franchise 50 Index, which tracks a diverse set of 50 publicly traded U.S. companies engaged in business format franchising, had good news for investors in Buffalo Wild Wings (NASDAQ: BWLD).

In its most recent report, issued Dec. 27, it was noted that the index dipped a mere 0.4% in the third quarter, while the S&P 500 dropped 9% in the same period.

BWLD was the principal contributor to the performance of the index. The company actually saw an increase in value of 62.3% during the quarter. The next best positive contributor to the index performance was McDonald's (NYSE: MCD), with an increase in value of 9%.

The company is in a strong capital position to take the next steps toward its goal of having 1,000 owned or franchised locations. With a current ratio of over 1.5 and a debt-to-equity ratio of 0.08%, compared with an industry average of 208%, BWLD should have little difficulty raising the necessary capital to grow.

When IHOP acquired Applebee's to form DineEquity (NYSE: DIN) back in July of 2007, I wrote this:

Maybe IHOP can work some magic and turn the chain around, but it might be difficult. The company is financing the entire acquisition with debt, and may not be so quick to provide the face lift the restaurants so badly need.

But then again, IHOP's revenue in 2006 was lower than it was in 2002. So maybe this is a case of two drunken sailors trying to hold each other up. There's nothing much to get excited about for shareholders of either company.

Since then the stock has gone from around $60 per share to $16, and Robinson Humphrey analyst Christopher O'Cull wrote in a note to investors that turning around Applebee's and refranchising stores to pay down debt is hardly an easy bet: "Even in a favorable economic environment this plan would be difficult to execute with little precedent within the restaurant industry. Now, given the weakening consumer backdrop coupled with tightening credit conditions this task will prove even harder." More ominously, O'Cull warned that if the company is unable to refranchise stores quickly, it may have to reduce its debt load "in a fashion that would be materially dilutive to equity holders." And with the stock price in the toilet, the timing couldn't be worse.

I don't take too much credit for being skeptical of the deal: betting on the failure of a large scale acquisition is like betting on Tiger Woods to make the cut at a Hooters Tour event.

A good rule of thumb that will save you from a lot of disaster: when a company you own announces a major acquisition, sell the stock.

On November 29, 2007, IHOP, now DineEquity (NYSE: DIN), announced it had completed the acquisition of Applebee's, with CEO Julia A. Stewart commenting that "We are delighted to complete the acquisition of Applebee's as it represents an opportunity to create significant long-term value for IHOP shareholders over and above what we could have achieved on a standalone basis." On that day the stock closed at $52.29.

The stock closed at $23.97 Monday, and will likely fall farther today following CFO Thomas G. Conforti departure after nearly six years, a fact the company disclosed in a press release euphemistically titled DineEquity, Inc. Announces Chief Financial Officer Transition.

Mr. Conforti "resigned from the Company effective immediately to pursue other opportunities." What those opportunities are, we don't know, but apparently they're more exciting than working at a company whose stock has declined by more than 50% in the past year.

Of course, it's always a red flag when a company's CFO resigns, and investors would do well to be skeptical here -- the move was abrupt, and no permanent replacement has been named.

Back when the deal was first announced, I wrote that "IHOP's revenue in 2006 was lower than it was in 2002. So maybe this is a case of two drunken sailors trying to hold each other up. There's nothing much to get excited about for shareholders of either company."

So far that's been an understatement but I won't take too much credit. The fact is that company-changing mergers and acquisitions rarely create value, and in the long run, betting against them is likely to produce a pretty good track record.

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Crapplebee's below in the comments.

I first heard the nickname "Crapplebee's" from my brother, when I suggested that we go to dinner at Applebee's and he didn't think it was such a good idea.

I don't know that Applebee's is "crappy" per se; it's more that there's nothing especially unique about it. It's very similar to Chili's, T.G.I. Friday's, Ruby Tuesday's, and a whole bunch of other fast-casual chains with "apostrophe s" in their names. T.J. Palmer recently said about the restaurant that "It doesn't have anything that would make me want to come back."

What makes that a major burn is that T.J. Palmer is the founder of the company! You can read her version of the company's history at her website.

On November 29th of 2007, IHOP, now DineEquity (NYSE: DIN), announced that it had completed the acquisition of Applebee's, with CEO Julia A. Stewart commenting that "We are delighted to complete the acquisition of Applebee's as it represents an opportunity to create significant long-term value for IHOP shareholders over and above what we could have achieved on a standalone basis."

On that day the stock closed at $52.29. It closed recently at $25.49. That's a decline of more than 50% since the acquisition: Crapplebee's indeed!

When IHOP (NYSE: IHP) agreed acquire Applebee's nine months ago, Applebee's shareholders were none too pleased. Highly respected investor Sardar Biglari vocally opposed the deal, Applebee's director Burton Sack made plans to sue, and shares of IHOP rose more than Applebee's on the announcement -- a very rare occurrence.

But now things have changed as the restaurant industry has continued to weaken and shares of IHOP have lost a good chunk of their value. Applebee's competitors like Ruby Tuesday's (NYSE: RT) have plunged, and the deal is looking less well timed.

The company released its first quarter results this week and the Applebee's turnaround appears to be doing as well as could be expected given the environment -- the company saw the first quarter of positive same-store sales growth in two years. However, plans to sell and lease back some of the real estate that came with the deal has been "challenged by weakening credit market conditions." The plan to franchise more of the company-owned stores has made some progress.

On July 17th, I had this to say about IHOP's (NYSE: IHP) deal to acquire to buy Applebee's (NASDAQ: APPB): "iHop shares soared on the news -- it's one of the only times I can think of that shares of an acquiring company have risen 3 times as much as those of the company being acquired. The premium was tiny -- the stock traded higher a month ago -- and represented a paltry return for the company's shareholders... I'm surprised none of the big institutional shareholders haven't spoken up yet."

Well none of the big institutional shareholders has spoken up, but a small yet feisty one has. Sardar Biglari, the Chairman and CEO of The Lion Fund and Western Sizzlin (OTC BB: WSZL), issued a press release blasting the deal:

MAJOR PAPERS:

• The Wall Street Journal (subscription required) highlighted the struggles of casual dining chain Applebee's International (NADSAQ: APPB), where even the company's founder said "[Applebee's] doesn't have anything that would make me want to come back".

OTHER PAPERS:

• According to the U.K. Times, Vodafone Group (NYSE: VOD) is the favorite to win the European rights for Apple Inc's (NASDAQ: AAPL) iPhone, despite stiff competition from rivals Orange and T-Mobile.
• From BusinessWeek's "Inside Wall Street" column:
• There's talk that Warren Buffett may increase his 17% stake in USG Corporation (NYSE: USG) before the housing cycle turns.
• Demand is surging for Kaydon Corporation's (NYSE: KDN) anti-friction bearings, which are used in robotics, aerospace, and other industries, including wind power equipment.
• Analysts say United Retail Group Inc (NADSAQ: URGI) has perfected fashion for the large womens' market, size 14 and over.

MOST NOTEWORTHY: Career Education Corp (CECO) and Expedia Inc (EXPE) were today's most notable downgrades:

• Prudential downgraded Career Education Corp (NASDAQ: CECO) to Underweight from Neutral with a $20 target based fourth quarter results and guidance.

• Expedia inc (NASDAQ: EXPE) was downgraded to Sector Performer from Sector Outperformer based on a deteriorating outlook and valuation following the weak fourth quarter.

OTHER DOWNGRADES:

• Various retail dining companies were downgraded today:
  
• Denny's Corp (NASDAQ: DENN) was reduced to Neutral from Buy at Merriman, citing weak traffic trends and the net unit growth delay into 2008.
• UBS downgraded Applebee's Int'l Inc (NASDAQ: APPB) to Neutral from Buy as they believe sales and traffic declines are likely to continue until easier comps in the second quarter.
  
• BB&T downgraded California Pizza Kitchen Inc (NASDAQ: CPKI) to Hold from Buy on valuation and concerns about earnings visibility.
  

• Constellation Brands Inc (NYSE: STZ) was cut to Neutral from Buy at Goldman Sachs on concerns around upcoming guidance and their belief that a recovery in the U.K. and Australia is at least a year away.
  

• Goldman downgraded WellCare Health Plans Inc (NYSE: WCG) to Sell from Neutral.
  

• Citigroup downgraded Petrobras Energia Participaciones ADS (NYSE: PZE) and Consolidated Communications Holdings Inc (NASDAQ: CNSL) to Sell from Hold.
  

• WedBush downgraded Take-Two Interactive Software (NASDAQ: TTWO) to Sell from Hold with a $15 target to reflect less optimism about the company's sport franchise and risk from the NY AG investigation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Bowing to the pressure from former SEC Chairman turned activist investor Richard Breeden, Applebee's International Inc. (Nasdaq:APPB) has put itself for sale. Investors aren't finding much to like about other casual dining chains either.

The Cheesecake Factory Inc. (Nasdaq:CAKE) has tanked 27 percent over the past year., P.F. Changs China Bistro Inc. (Nasdaq:PFCB) are down 20 percent over the past year. Darden Restaurants Inc. (NYSE:DRI) parent of the Olive Garden, is up about 3 percent, while Ruby Tuesday Inc. (NYSE:RI) is up about 4 percent not including its run-up today on the news about Applebee's.

Have Americans grown tired of cheesy chain restaurants or did these chains grow too fast? Whatever the reason, Wall Street seems to prefer tried and true fast-food chains over their more expensive counterparts.

McDonald's Corp. (NYSE:MCD) reported a 4.9 percent increase in comprable same-store sales in January. Applebee's, which reports earnings tomorrow, had a 5.8 percent decline during the same period. Its shares are up 23 percent. Yum Brands Inc. (NYSE:YUM), up 19 percent. had a strong fourth quarter despite of the Taco Bell scare.

Breeden Partners, a hedge fund, owns about 3.9 million shares of Applebee's (NASDAQ: APPB). The hedge fund's leader, Richard C. Breeden, who is the former head of the Securities and Exchange Commission, has been writing interesting letters to Applebee's CEO, Douglas Conant.

To put is simply, Breeden is displeased with Applebee's performance. And he has very good reason to be so. In his latest letter, he uses a variety of charts, most of which have downward slopes.

Breeden thinks the time has come for a big change in the compensation policy at Applebee's. According to him: "The result is essentially a license to pay anything to anyone, irrespective of actual performance in the marketplace."

Oh, and there are the perks. Breeden writers: "On 29 occasions from April 2006 through January 2007, Applebee's corporate aircraft flew into and out of Galveston, Texas, where former CEO Lloyd Hill happens to own a beach house. The nearest Applebee's restaurant is more than 40 miles away. Though Mr. Hill ceased to be CEO in September 2006, company planes continue the Galveston shuttle."

Yes, the letter is a good read. You can check it out on the SEC web site.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Richard Breeden knows how dysfunctional Corporate America can be. After all, he was once the Chairman of the SEC (from 1989 to 1993). After that, he has been an advisor to companies in trouble, such as Hollinger International and WorldCom (he terms this as "governance distress").

What's more, he has a fund that is focused on lagging companies. And this week the fund announced details of its 5.3% purchase of Applebee's (NASDAQ: APPB).

Basically, he is offering a slate of four new directors.

He also wrote a letter to the board of Applebee's that was fairly rough. He called the company's performance "dismal" and indicated that the return for investors over the past three years has been -13.4%.

Another issue: Breeden thinks that Applebee's management is not a model of corporate governance. For example, the bylaws were amended to require that any proposed directors be provided to the company within six months of the annual meeting.

But, of course, Breeden has some recommendations to turn things around: focus on franchising (which should free-up capital); cut operating expenses; and improve governance (such as reducing the number of insiders on the board).

No doubt, shareholder activism takes time (and doesn't always work). However, Breeden has some good suggestions -- and also a lot of credibility.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.