International House of Pancakes (IHOP) Franchise Costs, Fees & FDD

Year Business Began: 1958

Franchising Since: 1960

Headquarters: Pasadena, California

Estimated Number of Units: 1,825

Franchise Description: 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. 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. The SMILE Leadership program involves 45-50 hours per week over six weeks. In addition to Certified Leader Training, IHOP requires franchisees to complete Initial Opening Training before each restaurant opens. IHOP will review the franchisee’s experience and staffing plan to determine the training requirements, considering factors like industry experience, IHOP-specific experience, existing Certified Leaders, the number of IHOPs operated, and the most recent opening date. The franchisor reserves the right to require franchisees, their designated representatives, and certified leaders to attend up to two leadership training events per year, which may be virtual or in-person.

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 geographic scope of the franchised area will be determined based on computer modeling conducted by the franchisor utilizing a proprietary program which evaluates factors including geo-demographic information about the individuals who work and reside in proximity to the restaurant location, established drive times for IHOP customers, natural barriers and traffic patterns. The franchisor cannot provide any assurance as to the size or shape of the franchised area, as it may vary significantly depending on the above referenced 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 under the purchase program. Also, in exceptional cases, in its sole, subjective discretion, the franchisor may also finance a portion of the down payment.

Estimated Initial Investment

Name of Fee	Low	High
Location Fee	$15,000	$15,000
Initial Franchise Fee (less $15,000 Location Fee paid, for a total of $35,000)	$50,000	$50,000
Real Estate	Varies
Construction	$910,000	$2,900,000
Major Equipment, and Fixtures	$532,000	$664,000
Signage	$30,000	$60,000
Smallware Package/Opening Order	$15,000	$38,000
Inventory	$50,000	$100,000
Working Capital	$50,000	$200,000
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	$65,000
POS Setup, Training and Support Fee	$3,500	$9,000
Tray POS Software Fees (per year)	$1,100	$3,800
Europay, Mastercard, and Visa (EMV) Point to Point Encryption (P2P) Services (per year)	$1,300	$4,500
Wi-Fi Services (per month)	$90	$450
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)	$24	$960
Digital Products Service Fee (per month)	$0	$350
Implementation Fee	$500	$2,000
POS System Hardware	$20,000	$60,000
Wait Listing (per month)	$23	$75
Customer Relationship Management (CRM) Fee (per month)	$0	$150
Catering (per month)	$0	$60
Initial Additional Training Expenses (per person)	$4,000	$7,000
Supply Chain Co-op Stock Purchase	$0	$100
TRAY POS Training	$600	$1,800
Terminal Device Antivirus	$240	$600
Additional Funds - 3 months	$16,500	$85,250
Miscellaneous	$5,000	$26,000
ESTIMATED TOTAL*	$1,751,798	$4,506,865

*The range given is for a traditional venue restaurant. Real estate costs not included. Please see the non-traditional venue FDD for those estimates.

Other Fees

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 Franchisee Technology Services Support (Help Desk)	$1,700 to $2,300 per year, subject to change.
Punch and Loyalty Program	$0 to $100
BYOD/Pay ‘N’ Go	$0 to $100
Implementation Fees	$500 to $2,000
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 $18,000
Renewal Fee	$10,000 for general renewal term; amount to be negotiated for special renewal term.
Self-Supported Franchisee Technology Services Support	$425-$525 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 $1,280
Egg Audit	$0 to $500

The above information has been compiled from the FDD of IHOP. Year of FDD: 2025.
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