Considering a Denny’s Franchise? Don’t Overlook These 28 Important Franchise Fees

Updated August 17, 2019.

If you are considering a Denny’s franchise, don’t get blindsided by these 28 important franchise fees (from the initial franchise fee, to the royalty fee, to 26 other fees found in Items 5 and 6 of Denny’s 2019 FDD).

1.  Initial Franchise Fee:  $30,000

• You must pay Denny’s an initial franchise fee of $30,000 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 at an approved training Restaurant.

2.  Expenses of New Restaurant Opening Team:  $0 to $17,500

• You must pay the then-current costs associated with the New Restaurant Opening team, including salaries, travel, hotel, and meals for training at your Restaurant as it opens. As of the date of the disclosure document, those fees range from $0 to $36,000 depending on the level of assistance provided.

• Therefore, the total amount you must pay to Denny’s or its affiliates may range between $30,000 and $66,000, unless you open under a development incentive and do your own New Restaurant Opening training, in which case, the total amount you must pay to Denny’s or its affiliates may range from $0 to $20,000.

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 $30,000 for a twenty-year agreement.

• The initial successor franchise fee includes management training for any new Managing Owner, Designated Operator, and your managers at an approved training Restaurant.

• If you qualify to sign a Successor Franchise Agreement, you have the option of continuing in business at your existing location by signing the Successor Franchise Agreement that has a ten or a twenty year term.

4.  Royalty:  4.5% to 7% of your Gross Sales

• Due Date:  Payable weekly.

5.  Brand Building Fund:  3% to 3.25% of your Gross Sales

• Due Date:  Payable weekly.

6.  Local Advertising Coop Fee:  as determined by the Coop

• Due Date:  Payable weekly.

7.  Menus:  $413 to $580; 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 with customer pricing independently.

8.  Gift Cards:  $115.50

• Due Date:  As incurred.

• Gift Cards are packaged in boxes of 500 cards. Cost does not include shipping.

9.  Additional Management Training:  none

10.  New Restaurant Opening Training:  $0 to $36,000

• 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 and may vary by location

• 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 (off-site ordering and delivery):  $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.

25.  SCOC Surcharge:  $0.01 per case

• Due Date:  As incurred.

• All of these fees will be billed through your MBM/McLane invoice.

• Beginning January 1, 2018, the SCOC began charging $0.01 to each case delivered by MBM/McLane to cover expenses of SCOC related to programs, personnel, meetings, travel, and costs.

26.  iLumen (aggregation of franchise P&Ls):  $200

• Due Date:  Annual.

• This fee will be billed through your franchise finance account.

• You may be required to pay $200 per year for each Restaurant as the cost to use third-party software which aggregates and compares P&Ls from company and franchise Restaurants.

27.  CREATE (graphic design service):  as incurred

• Due Date:  As incurred.

• This fee will be billed through your franchise finance account.

• Denny’s provides local store marketing templates to you at no charge. However, if you want specialized marketing services (stickers, coupons, bar menus, local partnerships, etc.), Denny’s charges a fee per job.

28.  Presto:  as incurred

• Due Date:  Monthly.

• This fee will be billed through your franchise finance account.

• Presto is a table top ordering option that Denny’s is testing in 2019. The cost for 30 tablets is $15,000 that includes the tablets and three years of software services.