IHOP Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$381,000

-

$4,376,000

LOCATIONS

1658

Emily

Updated

May 2, 2024

Is

IHOP

a franchise?

Yes,
IHOP
currently
accepts
franchise
applications

The International House of Pancakes, commonly known as IHOP, is an iconic American brand that has been serving a wide variety of breakfast, lunch, and dinner items since its inception in 1958. Founded by brothers Al and Jerry Lapin, the first IHOP restaurant opened its doors in Toluca Lake, California. The brand began offering franchise opportunities just two years later in 1960, showcasing its early ambitions for growth and expansion. 

Today, IHOP operates under the umbrella of Dine Brands Global, which was established in 2007 and also includes Applebee's among its portfolio. This synergy leverages over 100 years of combined hospitality experience, emphasizing individual brand identity while promoting growth and customer satisfaction​​​​.

Headquartered in Pasadena, California, IHOP has grown substantially over the decades. These restaurants are known for their family-friendly atmosphere and affordable dining options, with a special focus on their world-famous pancakes. IHOP's menu diversity and commitment to warm, friendly service have made it a leader in the family dining category in the USA.

The brand's global footprint extends beyond the United States to include territories such as Puerto Rico, Guam, and countries like Mexico, Canada, Ecuador, Egypt, India, Pakistan, Panama, Peru, the UAE, and Saudi Arabia. It's noteworthy that all IHOP restaurants are owned by independent franchise operators, emphasizing the brand's franchise-driven business model​​​​.

How many

IHOP

franchises

are there?

In 2022, there were
1658
outlets in
the United
States, of which
1658
are franchises, and
0
are corporate-owned.

What are the

IHOP

franchise

fees?

Advertising fee

3.50%

Initial Franchise Fee

The initial franchise fee for an IHOP franchise is set at $25,000, which is required to be paid at the time of signing the Franchise Agreement. This fee grants the franchisee the rights to operate under the IHOP brand and access to the franchisor's proprietary systems and processes.

Royalty

IHOP franchisees are obligated to pay a royalty fee, which amounts to 4.5% of the franchise's total gross sales. This fee is payable on a weekly basis every Wednesday following the week in which the sales were made.

National Advertising Fee

Franchisees contribute up to 3.5% of their gross sales towards national advertising efforts, depending on the level of advertising support designated to their restaurant. The advertising fee is structured to enhance brand visibility and promote nationwide marketing campaigns, thereby indirectly benefiting all franchises within the network.

Local Advertising Expenditure Requirement

In addition to the national advertising fee, franchisees must spend up to 1% of their total gross sales on local advertising initiatives. This requirement ensures that franchisees actively promote their individual IHOP restaurants within their local communities, driving customer engagement and sales at the local level.

Dine Brands Franchisee Technology Services Support

An annual fee ranging from $1,000 to $1,800, subject to change, is charged for Dine Brands Franchisee Technology Services Support.

Self-Supported Franchisee Technology Services Support

For franchisees opting out of the Dine Brands Franchisee Technology Services Support, a fee of $275 to $400 is charged per service incident.

Digital Products Service Fee

Franchisees may incur a monthly service fee ranging from $0 to $350 for digital products, billed annually.

Renewal Fee

To continue the franchise relationship beyond the initial term, a renewal fee of $5,000 is charged upon execution of the renewal agreement.

Transfer Fee

If a franchisee decides to sell their franchise, a transfer fee of $7,500 is required, along with an additional $5,000 training fee per person per Restaurant.  

Note: The fees presented here can be found in the Item 5 of the Franchise Disclosure Document. For a complete list of all the fees borne by the franchisee, please consult the Franchise Disclosure Document.

How much does

it cost

to start a

IHOP

franchise?

It costs between
$381,000
and
$4,376,000
to start a
IHOP
franchise.
Type of Expenditure Amount
Initial Franchise Fee $25,000
Real Estate $10,000 - $45,000
Construction $350,000 - $2,600,000
Major Equipment and Fixtures $150,000 - $525,000
Smallware Package/Opening Order $5,000 - $30,000
Signage $25,000 - $100,000
Inventory $10,000 - $100,000
Working Capital $10,000 - $100,000
Insurance $35,000 - $100,000
Site Approval Costs $0 - $50,000
Opening Training Support Fee $0 - $55,000
POS Setup, Training and Support Fee $3,500 - $7,980
Tray POS Software Fees $1,100 per year - $3,300 per year
EMV Point to Point Encryption Services $1,000 per year - $2,500 per year
Kitchen Display System $15,000 - $30,000
Server Tablets with Payment Device $7,500 - $30,000
Ordering Kiosks $0 - $6,700
Initial Additional Training Expenses $4,000 - $7,000
Design Service Fee $6,700 - $6,700
Supply Chain Co-op Stock Purchase $0 - $100
Additional Funds – 3 months $16,500 - $85,250
Miscellaneous $5,000 - $26,000
Others-Monthly Fees $0 - $10,550
Total $701,132 - $3,971,197

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Does

IHOP

provide

training

to its

franchisees?

Yes,
IHOP
provides
training

IHOP provides a structured training program for franchisees, focusing on both foundational and operational aspects of running a restaurant. This program is designed to ensure franchisees and their staff are well-prepared to meet IHOP's standards.

Certified Leader Training

The program mandates that each franchisee have at least two restaurant leaders trained in day-to-day IHOP operations, achieving certification through an approved IHOP training program like the "SMILE Leadership" initiative. This training, which involves around six weeks of intensive learning, covers all necessary operational skills and IHOP Brand Standard Operating Practices. The leadership skills capstone, which may be conducted virtually, through eLearning, or in person, is part of this comprehensive training.

Initial Opening Training

In addition to Certified Leader Training, IHOP requires training related to the opening of each new restaurant. The specifics of this "Initial Training" depend on the franchisee's experience and staffing plan and can include direct operational training at the franchisee's location. IHOP determines the exact training requirements, which may extend until trainees achieve Certified Leader Certification or a decision is made to terminate a trainee's training. This part of the program is critical for ensuring the franchisee's team is ready for the restaurant's launch.

Management Seminars and Continuing Education

IHOP also mandates the attendance of at least one management seminar per year for franchisees, their Designated Representatives, and Certified Leaders. These seminars may be held virtually, at an IHOP restaurant, a training center, or another designated location. While there is no tuition for mandatory seminars, optional seminars may carry a fee.

Does

IHOP

provides

territory

protection?

IHOP does not grant franchisees an exclusive territory. Franchisees are awarded the right to operate at a specific franchised location, but this right is non-exclusive and limited to that specific location.

IHOP reserves all rights, including the right to own, operate, and franchise restaurants or other business concepts under different names, as well as the right to produce, franchise, license, distribute, and market products at or through any outlet, regardless of proximity to the franchised location​​.

Can a

IHOP

franchise

be run as

a passive

investment?

The franchisees are actively involved in the management of the IHOP franchise. If the franchisee is a certified manager, they must participate in the day-to-day operations of the franchised restaurant. This involves employing an additional IHOP certified leader to assist in managing the restaurant's daily activities. 

The franchisee and the additional certified leader must both complete IHOP's Training Program unless IHOP decides to waive this requirement due to the franchisee's prior experience with IHOP Restaurants or if they hire a manager or leader with necessary experience or IHOP training​​.

Related Posts