The franchisor is IHOP Franchisor LLC. The parent company is Dine Brands Global, Inc. The franchisor offers several different franchise programs for full-service restaurants which feature a range of “signature IHOP” pancakes, crepes, coffee and other offerings, as well as a diverse menu of other breakfast, lunch and dinner items. Traditional venue restaurants are commonly in free-standing buildings or an in-line center or other traditional commercial space. The franchisor also offers (under a different FDD) franchises for IHOP restaurants at non-traditional venues. Some of these non-traditional restaurants utilize a quick-serve format with a limited menu offering and shared seating.
Training Overview: The initial training for new franchisees entering the IHOP system is comprised of two parts: (1) Certified Leader Training and (2) Initial Opening Training., First, the franchisor requires that each franchisee have two restaurant leaders (one of which may be the franchisee if he or she is actively participating in day-to-day operations of the restaurant) per restaurant trained in day-to-day IHOP restaurant operations and requires that each obtains and maintains certification through an approved IHOP training program such as the “SMILE Leadership” program. Individuals certified in the day-to-day operations of an IHOP restaurant, and that complete leadership training are referred to as IHOP Certified Restaurant Leaders, or Certified Leaders. Certified Leaders shall be responsible for running the day-to-day operation of the IHOP restaurant which shall be done in accordance with IHOP Standard Operating Procedures and applicable legal and health and safety code requirements. The Certified Leader training program referred to above is comprised of two parts: (1) a six-week program of approximately 45 to 50 hours per week of training and (2) a leadership skills capstone workshop comprised of six sessions, held virtually, over a two-week time period. In addition to Certified Leader Training, IHOP requires training incident to the opening of each IHOP restaurant (Initial Opening Training). At its sole discretion, the franchisor will determine the opening training needs (including the number of trainers required) for each location. While additional training and refresher courses are offered by the franchisor from time to time, franchisees are not required to attend unless attendance is deemed essential by the franchisor.
Territory Granted: If franchisees sign a Franchise Agreement under the Single Store Development, Multi-Store Development, or Purchase Programs for a traditional venue, they are granted a franchise to operate one restaurant at a specific franchised location which is agreed upon at the time of the execution of the Franchise Agreement. So long as franchisees are compliant with the terms of the Franchise Agreement, the franchisor will not own, operate, franchise or license another traditional venue IHOP restaurant within an exclusive area surrounding the restaurant (the franchised area). The franchisor cannot provide any assurance as to the size or shape of the franchised area, as it may vary significantly depending on several factors. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that it controls.
Obligations and Restrictions: If the franchisee is one of the two required certified leaders for a restaurant, he or she must actively participate in the day-to-day operation of the franchised restaurant and employ an additional certified leader. Franchisees must attend and satisfactorily complete IHOP’s training program, unless the franchisor agrees to waive this requirement. If a franchisee is a corporation or other business entity, unless the franchisor otherwise consents, one person approved by IHOP shall at all times own directly or indirectly 51% or more of all the outstanding stock (if a corporation), all membership interests (if a limited liability company), a partner’s partnership rights (if a partnership), and 51% or more of all voting rights in the business entity. Franchisees must serve only those items and products as are expressly designated and approved in writing by the franchisor for sale and service from or at the restaurant.
Term of Agreement and Renewal: The length of the initial franchise term for traditional restaurants is equal to the term of the lease and is typically 20 years. If franchisees are compliant, they can add a renewal term of not more than 10 years. If franchisees are compliant, and the initial term was for less than 10 years, they can add a special renewal term; the initial term plus the special renewal term cannot exceed 25 years.
Financial Assistance: Under its purchase program only, the franchisor may finance a portion of the initial franchise fee. In exceptional cases, in its sole, subjective discretion, the franchisor may agree to finance the entire initial franchise fee. Also, in exceptional cases, in its sole, subjective discretion, the franchisor may also finance a portion of the down payment.
Investment Tables:
| Name of Fee | Low | High |
|---|---|---|
| Location Fee | $15,000 | $15,000 |
| Initial License Fee (less $15,000 Location Fee paid, for a total of $35,000) | $50,000 | $50,000 |
| Real Estate | $300,000 | $2,500,000 |
| Construction | $450,000 | $2,600,000 |
| Major Equipment and Fixtures | $200,000 | $700,000 |
| Smallware Package/Opening Order | $15,000 | $30,000 |
| Signage | $15,000 | $100,000 |
| Inventory | $10,000 | $100,000 |
| Working Capital | $10,000 | $100,000 |
| Insurance | $35,000 | $100,000 |
| On-Location Assistance | $0 | $16,000 |
| Site Approval Costs | $0 | $50,000 |
| Impact Study | $4,000 | $6,000 |
| Opening Training Support Fee | $0 | $55,000 |
| POS Setup, Training and Support Fee | $3,500 | $7,980 |
| Tray POS Software Fees (per year) | $1,100 | $3,300 |
| Europay, Mastercard, and Visa (EMV) Point to Point Encryption (P2P) Services (per year) | $1,000 | $2,500 |
| Wi-Fi Services (per month) | $90 | $400 |
| Kitchen Display System | $15,000 | $30,000 |
| Server Tablets with Payment Device | $7,500 | $30,000 |
| On-Line Ordering (per month) | $65 | $200 |
| Mobile Device Management (MDM) Fee (per year) | $12 | $480 |
| Digital Products Service Fee (per month) | $0 | $350 |
| Implementation Fee | $250 | $1,500 |
| POS System | $20,000 | $30,000 |
| Wait Listing (per month) | $15 | $69 |
| Curb Side Pick Up – Fly Buy/I’ve Arrived (per month) | $20 | $30 |
| Customer Relationship Management (CRM) Fee (per month) | $0 | $150 |
| Catering (per month) | $0 | $30 |
| Initial Additional Training Expenses | $4,000 | $7,000 |
| Supply Chain Co-op Stock Purchase | $0 | $100 |
| Additional Funds – 3 months | $16,500 | $85,250 |
| Miscellaneous | $5,000 | $26,000 |
| ESTIMATED TOTAL* | $1,178,432 | $6,649,797 |
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<small>*The range given is for a traditional venue restaurant. Please see the non-traditional venue FDD for those estimates.</small>
| Type of Fee | Amount |
|---|---|
| Royalty | 4.5% of total gross sales. |
| National Advertising Fee | 3.5% of total gross sales. |
| Local Advertising Fee | There is currently no required local advertising fee. |
| Cooperative Advertising | Varies depending on the franchisee’s decision to participate. |
| Additional Training Fee | $5,000 per person per restaurant. |
| Additional Assistance Fee | $375 per day per person, plus reasonable transportation and living expenses. |
| Compliance Audit Fee and Interest | Interest on the understated or unpaid amounts due to the franchisor at the highest rate allowed by law plus cost of audit. |
| Delayed Approval Fee | $170 per day |
| Delayed Development Fee | $350 per day. |
| Dine Brands Restaurant Technology Support Center (Help Desk) | $1,000 to $1,800 per year, subject to change |
| Digital Products Service Fee | $0 to $350 per month |
| Punch and Loyalty Program | $0 to $100 |
| BYOD/Pay ‘N’ Go | $0 to $100 |
| Implementation Fees | $250 to $1,500 |
| Insurance | Amount of unpaid premiums. |
| Late Fee | Highest rate permitted by law or 1.5% per month, whichever is less. |
| National Gift Card Program Charges | 15% of the redeemed portion of gift cards sold in the national program, but the amount may change. |
| On-Location Assistance Fee | $0 to $16,000 |
| Renewal Fee | $10,000 for general renewal term; amount to be negotiated for special renewal term. |
| Self-Supported Franchisee Technology Services Support | $275-$400 per service/incident. |
| Supplier/Distributor Approval | Costs of sample testing plus other actual costs, such as facility inspection. |
| Transfer Fee (Franchise Agreement) | $7,500 plus $5,000 training fee per restaurant |
| Transfer Fee (Multi-Store Development Agreement) | $2,500 |
| Food Safety Evaluation Reaudit Fee | $0 to $1,220 |
| Egg Audit | $0 to $500 |
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