Denny's Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$255,000 - $3,056,874.75
Franchise Fee
$10,000
Min Cash Required
$50,000
Total US Locations
1,334
Business Summary
Denny's restaurants are full-service, family-style establishments that offer a diverse menu of moderately-priced food in a casual dining atmosphere. Denny's operates using a comprehensive system that includes its trademarks, building designs, equipment, recipes, training, and operational standards. In addition to traditional restaurants, Denny's has introduced variations such as 'The Den,' which is a limited-service, nontraditional concept with a modified menu where customers typically order at a counter. Denny's also integrates modern service models like online ordering for pickup, third-party delivery, and in-restaurant ordering through devices.
Corporate History
Denny's was originally founded as Denny's, Inc. (DI), which began operating Denny's restaurants in 1959 and started offering franchises in 1963. DI was acquired indirectly in 1987 by TW Services, Inc., which later changed its name to Flagstar Corporation in 1993, then Advantica Restaurant Group, Inc. in 1998, and finally Denny's Corporation in 2002. DFO, LLC, the current franchisor, was incorporated in Delaware in 1994 as a wholly owned subsidiary of DI. In 1995, DI transferred its rights to the Denny's trademarks and system to DFO, LLC, which then licensed DI to continue operating its own restaurants. As of December 2024, Denny's Corporation's affiliate, Keke's, Inc., operates Keke's Breakfast Cafés, and another affiliate, Keke's Franchise Organization, LLC, offers Keke's franchises.
Financial Overview
Investment Range
$255,000 - $3,056,874.75
Franchise Fee (Low)
$10,000
Franchise Fee (High)
$30,000
Minimum Cash Required
$50,000
Royalty %
4.5%
Marketing %
3%
Equipment Costs (Low)
$1,515,000
Equipment Costs (High)
$2,700,000
Working Capital
$100,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
DFO, LLC and its subsidiary's consolidated financial statements were audited and received an unqualified opinion. The company is an indirect wholly owned subsidiary of Denny's Corporation and is disregarded for most income tax purposes, except for foreign income taxes on royalty payments. Substantially all expenses are paid by Denny's Corporation and allocated to DFO, LLC. The company's credit facility, consisting of a $400 million senior secured revolver, is guaranteed by Denny's Corporation and its material subsidiaries, and DFO, LLC was in compliance with all financial covenants as of December 25, 2024. The total assets were $80,347,000 in 2024, and total member's equity was $64,250,000. The net income for 2024 was $57,274,000. Revenues primarily consist of franchise and license fees and advertising revenue, which are sales-based. DFO, LLC provides incentives and subsidies to franchisees for new unit openings and equipment upgrades, recorded as contract assets.
Financing Details
Denny's does not typically offer financing to franchisees but may occasionally finance the purchase of POS systems and other items introduced into the Denny's System. In limited circumstances, Denny's, Inc., an affiliate, may finance a portion of the purchase price of a former company restaurant. If this occurs, the Promissory Note would have fixed interest rates (greater of 9% or current market rate, up to 5 years term, covering up to 40% of the purchase price), with no prepayment penalty. Denny's, Inc. would take a junior security interest in the financed property and require personal guarantees from owners. Payments would be made weekly through the Payment Card Agreement, with any outstanding amounts declared due upon default. Denny's does not receive revenue from third-party financing placements.
Performance Metrics
Total US Locations
1,334
Franchised Units
1,273
Corporate Units
61
Avg Square Footage
4,200
Franchising Since
1963
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
Yes
Litigation Count
3
Litigation Summary
Denny's has disclosed three litigation cases. In 2014, 50 East Thousand Oaks, LLC sued Denny's, Inc. alleging breach of contract and misrepresentation regarding the conditions to operate a Denny's franchise. This case was dismissed in 2016 with a settlement payment of $115,000 from Denny's and its affiliates. In 2019, Rogers Family Foods, LLC sued DFO, LLC concerning continued royalty and brand building fees under an expired franchise agreement, seeking to pay lower rates. DFO, LLC filed a counterclaim, and the parties settled in 2021 with a new successor franchise agreement, each party covering its own costs. More recently, in August 2022, RWDT FOODS, INC. filed a complaint against DFO, LLC and Denny's, Inc., alleging breach of contract, breach of contract with fraudulent act, breach of implied good faith, intentional interference, conversion, and unjust enrichment. Denny's is planning to vigorously defend this ongoing claim.
Bankruptcy History
Denny's has disclosed one bankruptcy proceeding involving Balbair Pal, a Regional Director of Franchise Operations. This individual was named as a joint debtor in a Chapter 13 bankruptcy case filed in the U.S. Bankruptcy Court for the District of Arizona. An order of discharge was granted on June 12, 2020, which discharged most of the debts in that case. Denny's Corporation, DFO, LLC, or any other persons identified in Items 1 or 2, do not have other bankruptcy history.
Agreement Terms
Initial Term
20 years
Renewal Conditions
Denny's Franchise Agreements in the United States do not have rights of renewal. However, existing Denny's franchisees in good standing with an expiring franchise agreement may request approval for a Successor Franchise Agreement. This successor agreement would grant the right to continue operating the existing restaurant for a term of ten, eleven, twenty, or twenty-one years.
Training & Support Program
Franchisor Assistance
Denny's provides pre-opening assistance, including prototype plans and specifications for restaurant layout, equipment, and signs, along with a list of approved suppliers. Franchisees, managing owners, or designated operators, and their managers receive initial management training at approved training restaurants. Denny's also dispatches a new restaurant opening (NRO) training team, at the franchisee's expense, to assist with employee training and development. Ongoing support includes developing and executing advertising, public relations, and promotional campaigns, protecting trademarks, and conducting periodic restaurant inspections with evaluation reports. Denny's provides ongoing guidance on the Denny's System, updates to the Brand Standards/HACCP Manual, and offers menu maintenance and support for the Standard Enterprise Technology Platform for an additional fee. Franchisees also have access to an intranet for operational requirements and information. The Supply Chain Oversight Committee (SCOC) collaborates on strategic supply chain oversight and improvements.
Initial Training Hours
400
Training Location
Approved STAR Training Restaurants
Ongoing Support
After opening, Denny's provides ongoing assistance through various channels. This includes developing and executing advertising, public relations, and promotional campaigns for the brand, as well as protecting its trademarks. Denny's conducts periodic restaurant inspections and delivers evaluation reports to franchisees, offering guidance on system improvements and changes. The Brand Standards/HACCP Manual is regularly modified to reflect updated standards and procedures. For an additional fee, Denny's provides menu maintenance and support for the Standard Enterprise Technology Platform. Franchisees also have access to an intranet for system requirements and information, and the Supply Chain Oversight Committee (SCOC) collaborates on strategic supply chain oversight and improvements.
Franchise Requirements
Ideal Candidate Profile
Denny's seeks franchisees with sufficient financial resources and prior operating experience with a restaurant concept similar to Denny's. Candidates must be approved by Denny's. The franchisee group needs at least one individual, either the franchisee personally or a managing owner (of a legal entity), to participate full-time in the direct, on-premises operation of the restaurant, guiding employees and enforcing brand standards, and residing near the restaurant. If a qualified individual is not an owner/guarantor with sufficient experience, a Designated Operator must be affiliated who has at least a 10% equity interest or an approved employment agreement, dedicates full-time efforts to supervision, and also permanently resides near the restaurant. All prospective franchisees who are new to the Denny's system are required to consult with an independent financial advisor.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
full-time
Territory Type
non-exclusive
Staffing Notes
Denny's requires each restaurant to have at least three managers who have completed the company's manager training program and are responsible for day-to-day operations, including food preparation, accounting, and personnel supervision and training. If a Managing Owner or Designated Operator oversees multiple restaurants, three other managers are still required at each location. Managers must work full-time and permanently reside near the restaurant. Non-management employees are required to complete Denny's employee training programs, which utilize the 'Ignite' Learning Management System and 'Team Member Breakthrough Training Guides.' Recommended training hours for specific non-management roles include 18 hours for Host/Hostess, 105 hours for Cook, 36 hours for Server, and 12 hours for Service Assistant. Denny's clarifies that the franchisee retains sole authority over hiring, supervising, disciplining, and terminating employees, and is entirely responsible for all employment matters and compliance with federal, state, and local labor laws.