Bottom line
- Total investment $381K – $4.8M including a $50K franchise fee, 4.5% ongoing royalty.
- Average unit revenue of $2.0M/year (median $2.0M).
- Rated STRONG with a risk score of 48/100. SBA loan default rate of 0.0% across 86 loans (below the industry average).
- 22 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one IHOP unit return on the cash you put in?
Unlevered ROIC · per unit
11%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 IHOP units return on equity?
Equity IRR · 5-yr
32.8%
4.13× MOIC
Year-1 DSCR
2.46×
EBITDA ÷ debt service
Equity required
$6.3M
on $16.1M purchase
Total debt
$9.8M
SBA $5.0M + senior + seller note
Overview
About
Franchisees operate casual dining breakfast/lunch restaurants serving pancakes, waffles, omelets, and American comfort food. Day-to-day operations include managing 24-7 or extended-hour service, overseeing kitchen and front-of-house staff (typically 30-80+ employees), inventory management, food cost control, and local marketing to drive traffic during competitive meal dayparts.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 5 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
IHOP presents meaningful investment risk due to declining unit growth, missing financial transparency (no Item 19 net income), extensive litigation history, and unproven profitability metrics relative to substantial capital requirements.
Score breakdown · what drove the 48 / 100 rating
- 01MINORUnit count declining 1.5% YoY indicates contracting system despite 1,642 locations
- 02MEDAverage net income not disclosed in Item 19 prevents ROI validation against $380k-$4.8M investment range
- 03HIGHExtensive litigation history including fraud, ADA compliance, and employment class actions suggests operational and compliance challenges
- 04MEDHigh royalty burden (4.5%) combined with undisclosed net income creates profitability uncertainty
- 05MINOREviction and restraining order actions against former franchisees indicate potential franchisor-franchisee relationship stress
- 06MINORWide investment range ($380k-$4.8M) suggests highly variable unit economics and performance unpredictability
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
100 numbers
One-time purchase · CSV download · Validation questions included
FDD download
IHOP · FDD (2026) PDF