If you are considering a Denny’s franchise, don’t get blindsided by these 24 important franchise fees (from the initial franchise fee, to the royalty fee, to 22 other fees found in Items 5 and 6 of Denny’s 2017 FDD).
1. Initial Franchise Fee: $40,000
- You must pay Denny’s an initial franchise fee of $40,000 for each Denny’s franchise.
- The initial franchise fee includes management training for you, your Managing Owner, your Designated Operator, if required, and your managers. The initial franchise fee also includes the salaries of Denny’s New Restaurant Opening team.
2. Expenses of New Restaurant Opening Team: $0 to $17,500
- You must pay a fee covering the then-current costs associated with the expenses of the New Restaurant Opening team, including travel, hotel, and meals. As of the date of the 2017 disclosure document, those fees range from $0 to $17,500 depending on the level of assistance provided.
- Therefore, the total amount you must pay to Denny’s or its affiliates may range between $40,000 and $57,500, unless you open under a development incentive, in which case the total amount you must pay to Denny’s or its affiliates may be less and may range from $0 to $57,500.
3. Successor Franchise Fee: $10,000 to $40,000
- If you execute a Successor Franchise Agreement, you must pay an initial successor franchise fee of $10,000 for a ten-year agreement or $40,000 for a twenty-year agreement.
- The initial successor franchise fee includes management training for any new Managing Owner, Designated Operator, and your managers.
- If you qualify to sign a Successor Franchise Agreement, you have the option of continuing in business at your existing location by signing either the Successor Franchise Agreement that has a ten or twenty year term.
4. Royalty: 4.5% to 6.5% of your Gross Sales
- Due Date: Payable weekly.
5. Brand Building Fund: 3% of your Gross Sales
- Due Date: Payable weekly.
6. Local Advertising Coop Fee: as determined by the Coop
- Due Date: Payable weekly.
7. Menus: $25 to $41; prices subject to change for each menu rollout
- Due Date: 1 to 2 times per year.
- Pre-printed menus can be ordered through Denny’s or you may order shells and have menus printed independently.
8. Gift Cards: $35
- Due Date: As incurred.
- Gift Cards are packaged in boxes of 250 cards. Cost does not include shipping.
9. Additional Management Training: none
10. New Restaurant Opening Training: $0 to $17,500
- Due Date: 30 days prior to beginning of training.
- Assistance and cost associated vary depending on level of training.
11. Insurance: actual cost
- Due Date: Within 7 days of receipt of bill.
- If you fail to maintain required insurance coverage, Denny’s may obtain this coverage at your expense.
12. Reimbursement for Products, Services, etc.: actual cost
- Due Date: Within 7 days of receipt of bill.
- You must reimburse Denny’s for purchases it makes on your behalf.
13. Audit: cost of audit
- Due Date: Within 7 days of receipt of bill.
- Payable only if you fail to furnish required information or if you understate Gross Sales by more than 2%.
14. Testing: actual cost
- Due Date: Within 7 days of receipt of bill.
- Applies to products not on Denny’s approved products list.
15. Correction of Deficiency or Unsatisfactory Condition: actual cost
- Due Date: Within 7 days of receipt of bill.
- If you fail to correct deficiency, Denny’s may do so on your behalf and at your expense.
16. Assignment: to be determined by Company from time to time, currently $5,000 per restaurant, and $7,500 for every restaurant which changes owners past its remodel due date
- Due Date: Prior to transfer or within 7 days of receipt of bill.
17. Rent: varies depending on type of lease
- Due Date: Weekly.
- Applies if you lease or sublease the Restaurant premises from Denny’s.
18. Sublease: 75% of amount by which sublease rent paid to you exceeds rent you pay to Denny’s
- Due Date: Weekly.
19. Interest: lesser of 15% per year or maximum legal rate
- Due Date: Upon demand.
- Payable on overdue amounts.
20. Costs and Attorneys’ Fees: actual cost
- Due Date: As incurred.
- Payable if you fail to comply with Franchise Agreement.
21. Indemnification: actual cost
- Due Date: As incurred.
- You must reimburse Denny’s if it is held liable for claims arising from your operation of the Restaurant.
22. DINE Support: to be determined by Company
- Due Date: Monthly.
- Payable if you use the DINE POS system.
23. Credit Card Fees: as determined by third-party card processors
- Due Date: Weekly.
- Fee Schedule is provided to you as Schedule 1 to the Payment Card Agreement.
24. Denny’s on Demand: $50 activation; $25 monthly; $0.70 to $1.00 per transaction; $0.50 per delivery
- Due Date: Monthly.
- All of these fees will be billed through your franchise finance account.
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