Verified — real FDD extraction
SBA-eligible · directory code S2351 since 2018
DENNY'S
Other · independent · est. —
Denny's is a full-service family diner chain serving breakfast all day plus lunch and dinner menus, with many locations open around the clock. A franchisee operates a sit-down restaurant with a kitchen and wait staff, serving families, travelers, and late-night diners.
DENNY'S net unit count declined -9.5% from 2023–2025 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Proven & steady
Distress
A real track record with an unremarkable region of the ledger: neither the growth nor the exits stand out, for better or worse. The main concern in the record: too many owners are failing outright rather than selling.
Exit rate · latest year
5.7%
fiscal 2025, per Item 20
Cost to open
$1.6M–$3.1M
Item 7 total investment range
SBA loan defaults
7.3%
vs 14.8% avg across rated brands
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2023–2025
Survival record
FDD Item 20 · outlet status by year
In fiscal 2025, 72 of 1,273 franchised outlets left the system — a 5.7% annualized exit rate. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Outlets at start | 1,445 | 1,407 | 1,334 |
| Opened | 17 | 14 | 12 |
| Transfers | 31 | 11 | 18 |
| Terminations | 0 | 0 | 4 |
| Non-renewals | 0 | 0 | 0 |
| Reacquired by franchisor | 0 | 0 | 1 |
| Ceased — other reasons | 55 | 83 | 68 |
| Outlets at end | 1,407 | 1,334 | 1,274 |
| Net change | -38 | -73 | -60 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 297 SBA-backed loans to DENNY'S franchisees since 1991. Of the 220 that have resolved, 7.3% were charged off (defaulted) rather than paid in full, versus 14.8% across 576 rated brands.
7.3%
16 of 220 resolved defaulted
57.7%
avg. charged-off $ ÷ approved $
4.2%
default rate × loss severity
$1,056,470
what recent franchisees borrowed
86 mo
approval → charge-off, defaulted loans
10 vs 18
distinct banks — pulling back
Charge-off rate by loan approval year (%)
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO DENNY'S BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
The owner's side of the deal
FDD × federal loan record
A typical DENNY'S buyer since 2020 borrowed $1.1M through SBA — about $116K a year in debt service. Against the brand's own disclosed median unit revenue of $1.8M, that is 6.3% of every dollar the store takes in — before rent, payroll, food, or royalty.
Who finances it
Wells Fargo Bank National Association
18.1% of this brand's loans
That lender charges off 15.6% of its loans to other franchise brands, vs 14.8% nationally.
Who buys it
66.5%
first-time franchise owners
The rest already owned at least one other franchise. Across the corpus, brands bought mostly by repeat operators charge off at roughly 10% versus 17% for brands sold mostly to newcomers.
Does experience help here?
−9.0pp
multi-unit vs single-unit owners
Owners of multiple units default at 0.0%; single-unit owners at 9.0%.
Computed from 297 SBA 7(a)/504 loans to DENNY'S franchisees joined to the brand's own FDD. Debt service assumes level amortization at the average disclosed term and rate. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $30K franchise fee (Item 5) and a total investment of $1.6M–$3.1M (Item 7). The franchisor publishes an earnings claim (Item 19) — read its methodology closely.
To open (Item 7)
$1.6M–$3.1M
all-in investment range
Franchise fee (Item 5)
$30K
upfront, one-time
Royalty (Item 6)
4.5%
of sales, ongoing
Your figure — cross-check against this brand's Item 19 and current-owner validation.
Royalty you'd pay / yr
$45K
4.5% of sales, before profit
Over a 10-yr term
$450K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for DENNY'S with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 305 wage cases against operators of this system, recovering $2.2M in back wages for 6,784 workers, including 24 child-labor cases. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
305
Back wages owed
$2.2M
Employees affected
6,784
Since 2020
25
24 of these cases involved child-labor violations, covering 36 minors across the system's franchised locations.
Read this carefully. The employers in these cases are individual DENNY'S franchisees — separately owned businesses operating under the brand name — not DENNY'S itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2025.
Modeled risk
FDD Risk Score · modeled from the public record
Modeled from the public record, this brand looks safer than 82% of systems we score.
Risk percentile
18 / 100
Measured
Modeled SBA charge-off
8.3%
Observed SBA charge-off
7.3%
Top drivers: System size (log units) (lowers) · Investment ceiling (log) (lowers) · Net unit growth (raises) · Single-lender dependence (raises). 50+ resolved loans and complete disclosure data — the score is checkable against the brand's observed rate. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
Denny's closes Hartford restaurant, leaving 3 in Connecticut
news:CT Insider · 1mo ago
Denny's Closing 150 Restaurants Preside (M5vMQoRXBZ)
news:Mshale · 1mo ago
Denny's in Herkimer Closes Permanently
news:WKTV · 5mo ago
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing DENNY'S's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →DENNY'S franchise questions, answered from the filings
What percentage of DENNY'S franchises closed last year?
In DENNY'S's latest FDD Item 20 (fiscal 2025), 72 of 1,273 franchised outlets left the system — an annualized exit rate of 5.7%. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a DENNY'S franchise cost?
Per DENNY'S's 2026 FDD, buying in requires an initial franchise fee of $30K (Item 5) and a total initial investment of $1.6M–$3.1M (Item 7).
What royalty does DENNY'S charge?
DENNY'S charges an ongoing royalty of 4.5% of gross sales, per Item 6 of its 2026 FDD.
Does DENNY'S disclose earnings (Item 19)?
Yes — DENNY'S makes a financial performance representation in Item 19 of its 2026 FDD, reporting a median unit volume of $1.8M. Read it closely: franchisors choose which units and which metrics to include.
How often do SBA loans for DENNY'S franchises default?
Across 297 SBA-backed loans to DENNY'S franchisees since 1991, 16 of the 220 that have resolved were charged off — a 7.3% default rate, versus about 14.8% across all rated franchise brands. This is the lender's-eye view of franchisee failure, drawn from public SBA 7(a)/504 FOIA data and independent of the franchisor's own disclosures.