Tashlin Lakhani

Assistant Professor of Management and Organizations

Tashlin Lakhani, a professor of management and organizations at Cornell University’s Nolan School of Hotel Administration, says Denny's going private is likely to have noteworthy implications for franchisees.

Lakhani says:

“I expect we will see some franchised locations being closed — particularly those that are underperforming or located in weaker markets. Corporate may take over some of those units in key markets and turn them around before reselling to higher performing franchisees in the system. 

“Being open 24 hours a day is still a competitive advantage for the chain in some markets, but not all. Some changes that franchisees may see because of this deal include streamlined menus emphasizing healthier options, and updated restaurant designs and equipment to encourage more customers to dine in. We may also see Denny’s adding more grab-and-go menu items and drive-throughs to meet shifting consumer demands and compete with other fast-casual/quick service options. 

“These types of initiatives often require significant investments from franchisees, who may resist changes without a guarantee of return on their investment. Although franchise agreements typically mandate periodic renovations, the company could incentivize franchisees to comply with temporary reductions in royalty fees and other financial incentives to offset franchisees’ increased costs.”