Bloomin' Brands, Inc.

Current report

We have limited control with respect to the operations of our franchisees and the business challenges they face, which could have a negative impact on our business.

Current report

Our franchisees are contractually obligated to operate their restaurants in accordance with our standards and we provide training and support to franchisees. However, franchisees are generally independent third parties that we do not control, and these franchisees own, operate and oversee the daily operations of their restaurants. As a result, the ultimate success and quality of any franchise restaurant rests with the franchisee. If franchisees do not successfully operate restaurants in a manner consistent with our product and service quality standards and contractual requirements or if and when they face financial or other difficulties that result in restaurant closures or bankruptcy, our image and reputation could be harmed, which in turn could adversely affect our business and operating results.

Current report

A significant portion of our financial results are dependent upon the operational and financial success of our franchisees. If sales trends or economic conditions worsen for franchisees, their financial results may worsen and our royalty, rent and other fee revenues may decline. In addition, we may also incur expenses in connection with supporting or repurchasing franchise restaurants that are underperforming. As small businesses, some of our franchise operators may be negatively and disproportionately impacted by strategic initiatives, capital requirements, inflation, increased interest rates, labor costs, employee relations issues, or other causes. When Company-owned restaurants are sold to a franchisee, one of our subsidiaries is often required to remain responsible for lease payments for the sold restaurants to the extent the purchasing franchisees default on their leases. During periods of declining sales and profitability of franchisees, the incidence of franchisee defaults for these lease payments may increase and we may be required to make lease payments and seek recourse against the franchisee or agree to repayment terms.

Current report

For example, due to historical operating challenges, we had entered into an agreement with Out West, which is a franchisee of 61 currently open and operating Outback Steakhouse restaurants, and its lenders that provided for deferral and forbearance of the parties’ rights with respect to prior payment defaults, reduced franchise fees, and other mechanisms to settle its obligations with its lenders and provide for capital expenditures. On November 2, 2026, Out West filed Chapter 11 bankruptcy petition(s) in the U.S. Bankruptcy Court for the District of Delaware, which was to trigger termination of the forbearance agreement and default under Out West’s franchise agreement with us, however, these provisions are subject to an automatic stay under the bankruptcy laws and the parties’ rights and remedies under these agreements are subject to resolution through the Chapter 11 proceedings.

Current report

Leading up to the Chapter 11 filing, we had been working with Out West and other parties to mitigate business disruption and evaluate our options with respect to the continuity of the franchised locations. As a result, in connection with the Chapter 11 proceedings, we entered into an Asset Purchase Agreement pursuant to which we agreed to serve as the stalking horse bidder for the acquisition of substantially all the franchisee’s assets, subject to the Bankruptcy Court’s approval and a competitive bidding process. We also agreed to provide the DIP Facility up to $5.5 million to support Out West’s operations during the Chapter 11 proceedings, which is also subject to Bankruptcy Court approval. The Chapter 11 proceedings remain ongoing. Accordingly, there can be no assurance that we will complete the contemplated asset acquisition on the anticipated terms or timing or at all, due to the need for Bankruptcy Court approval, potential objections, the outcome of the auction process (including sale of the assets to another restaurant operator) or other factors, or as to the ultimate outcome of the bankruptcy proceedings. We continue to evaluate developments in the proceedings and the potential impact on our business, results of operations, cash flows and financial condition, including our ability to protect our rights as franchisor and address our risks as guarantor of certain of Out West’s leases. The Chapter 11 proceedings may also have a negative impact on our reputation and turnaround strategy due to the association with our brand. Even if we complete the acquisition, we may face risks related to our operation of the Out West locations thereafter, including due to unexpected costs, employee attrition, customer perceptions, our ability to maintain relationships with suppliers, vendors, partners and other third parties and licensing bodies as result of the Chapter 11 filing and diversion of management’s attention from other business operations and opportunities. Any of these factors could have a negative impact on our business, results of operations, cash flows and financial condition.