Denny’s Franchise Costs $305K – $2.3M (+ 2024 Profits)

Denny’s, known for its iconic diner-style eateries, has been a staple in the American restaurant scene since its rebranding from Denny’s Coffee Shops in 1961. Headquartered in Spartanburg, South Carolina, since 1991, Denny’s has grown significantly from its humble beginnings.

A key milestone was the introduction of the Grand Slam® in 1977, which became synonymous with the brand. Denny’s differentiates itself with a focus on diversity and community engagement, as highlighted by its top rankings in diversity by Fortune Magazine in 2000 and Black Enterprise magazine in 2006.

The franchise is also recognized for its innovation, with the launch of Denny’s On Demand in 2017 and virtual brands in 2021, further enhancing its service offerings​.​

Type of Expenditure	Amount
Initial Franchise Fee	$30,000
Site Improvements	$0 – $300,000
Building and Improvements	$800,000 – $1,000,000
Architectural Design and Engineering	$30,000 – $60,000
Equipment, Fixtures and Furnishings	$350,000 – $450,000
Signs	$40,000 – $90,000
Standard Enterprise Technology Platform	$25,000 – $40,000
Opening Inventory and Supplies	$20,000 – $30,000
Opening Advertising	$3,000 – $5,000
Opening Menus	$340 – $500
Opening Gift Cards	$74.75
New Restaurant Opening Training Team	$0 – $36,000
Security Deposits	$10,000 – $15,000
Insurance	$15,000 – $20,000
Soft Costs (Permits, Survey, Inspections)	$5,000 – $100,000
Additional Funds – 3 months	$100,000 – $150,000
Total (exclusive of land)	$1,428,424 – $2,326,574

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

The initial franchise fee for a standard restaurant is $30,000, non-refundable, paid upon signing the Franchise Agreement.

Royalty Fee

A weekly Royalty Fee of 4.5% of the franchisee’s weekly gross sales.

Brand Building Fee

A weekly Brand Building Fee of 3% of the franchisee’s gross sales for advertising, public relations, and promotions.

Successor Franchise Fee

For renewing or extending the franchise agreement, a Successor Franchise Fee of $10,000 for a ten or eleven-year agreement or $30,000 for a twenty or twenty-one-year agreement.

Brand Technology Fee

A weekly Brand Technology Fee for technology support, which includes helpdesk, standard reporting, and menu/discount maintenance. The fee is $55 per week for Xenial and $45 per week for DINE.

Development Deposit (for H2.0 Development Agreement)

A development deposit of $30,000, non-refundable, payable upon signing a development agreement, applied to the initial franchise fee of the first restaurant opened under the agreement.

Franchise Pros and cons

Before starting a Denny’s franchise, here are some of its advantages and disadvantages.

Pros

• Family restaurant: Denny’s brand is known as one of the best American diners with its family-style full-table service. It is the best option for customers who love to hang out and enjoy tasty foods served directly at the table. Overall, it provides a great casual dining experience where customers can socialize as they enjoy their meals.
• Brand popularity: The Denny’s franchise is well-known and loved by a large segment of the population. It has a presence in all 50 US states and internationally. Denny’s is a great option for families and friends who love hanging out for great dining experiences. New franchisees are guaranteed the opportunity to attract a lot of customers who already identify with the brand.
• Training and support: the franchisor offers solid training and support for its franchisees to succeed. It trains new franchisees in restaurant management, food and safety, culinary management, and hospitality management.
• Financing: The franchisor may, under some circumstances, finance the purchase of point-of-sale equipment for franchisees, though it is under no obligation to do this. In addition, Denny’s provides third-party financing arrangements for its franchisees, who may wish to be financed to fund franchise fees, startup costs, equipment, inventory, and expansion.
• Marketing and advertising: Franchisees can greatly rely on their parent company to market and advertise their products. The brand is known locally and internationally and has a large customer base. New franchisees can take advantage of the company’s established advertising to promote and publicize their local restaurants. This is cheap and effective since franchises can reach huge populations at low costs.

Cons

• Not a passive investment: The Denny’s franchise does not allow for absentee ownership. As a result, it is not a good investment for those seeking passive investment. The franchisor requires the owner to be fully involved in the operations of the restaurant.
• No territory protection: The franchisor requires franchisees to operate their restaurants from only the locations it grants and approves. It, therefore, does not grant its franchisees any exclusive territory for operations.
• Competition: The food and beverage industry is growing fast with new market players, and Denny’s brand faces a lot of competition. Some of its competitors are world leaders like Burger King and McDonald’s. Denny’s franchisees also face competition from franchises granted by or controlled by the parent company.

How to apply

Opening a Denny's franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Denny's franchise.

1. Conduct Initial Research

• Familiarize yourself with the Denny’s brand, history, and values.
• Understand the menu, target market, and unique selling propositions of Denny’s restaurants.
• Visit existing Denny’s locations to observe operations and talk to franchisees about their experiences.

2. Review Financial Requirements

• Assess the initial investment needed, including franchise fees, construction costs, equipment, and initial working capital.
• Ensure you meet the financial criteria set by Denny’s, such as minimum net worth and liquid assets requirements.
• Consider financing options, if needed, including loans or investor partnerships.

3. Submit a Franchise Application

• Complete the franchise application form available on Denny’s official franchise website.
• Provide detailed information about your business background, financial standing, and reasons for wanting to open a Denny’s franchise.
• Pay any applicable application fees to process your request.

4. Attend Discovery Day

• If your application is considered, Denny’s will invite you to a Discovery Day at their corporate headquarters or a designated location.
• Use this opportunity to meet the franchisor team, learn more about the business model, and ask detailed questions about operations and expectations.
• Evaluate if Denny’s franchise is the right fit for your business goals.

5. Review and Sign the Franchise Agreement

• Once approved, you will receive a Franchise Disclosure Document (FDD) outlining all aspects of running a Denny’s franchise, including fees, obligations, and legal considerations.
• Review the FDD with a lawyer experienced in franchise law to understand the terms and conditions.
• Sign the franchise agreement and pay the initial franchise fee to secure your Denny’s franchise rights.

6. Secure a Location

• Work with Denny’s real estate team to identify and approve a suitable location based on market research, demographics, and brand strategy.
• Ensure the location complies with Denny’s site criteria and has high visibility, accessibility, and the potential for customer traffic.
• Finalize the lease or purchase agreements for the chosen location.

7. Design and Construct Your Restaurant

• Follow Denny’s design and construction guidelines to plan your restaurant layout, interiors, and kitchen equipment setup.
• Hire approved contractors and architects familiar with Denny’s specifications and local building codes.
• Schedule and pass all necessary inspections to ensure compliance with health, safety, and building regulations.

8. Undergo Training

• Complete the required training program provided by Denny’s, which covers restaurant management, operations, customer service, and food safety.
• Train your management team and staff according to Denny’s standards and procedures.
• Use this time to familiarize yourself with Denny’s operational systems, marketing tools, and support resources.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

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