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Business Description

Our first predecessor, Denny's, Inc. (DI), has owned and operated Denny's restaurants since 1959 and began offering franchises in 1963. DI was indirectly acquired by TW Services, Inc. in September 1987 when TW Services, Inc. bought all of the outstanding equity securities of DHI Corporation, a Delaware corporation and then the sole stockholder of DI. TW Services, Inc. changed its name to Flagstar Corporation (FC) in June 1993. In January 1998 FC merged with its parent, Flagstar Companies, Inc. (FCI), a Delaware corporation; and FCI, the surviving entity, changed its name to Advantica Restaurant Group, Inc. (ARG). ARG changed its name to Denny's Corporation (DC) in July 2002. DC therefore is the ultimate parent of both DI and DFO. DC has, either directly or through affiliated companies, owned, operated, or franchised restaurants since 1989.

Prior Experience

We were incorporated in Delaware on December 27, 1994, as a wholly owned subsidiary of DI. On that same date, DI transferred to us the capital stock of Denny's Realty, Inc., its wholly owned real estate subsidiary. On March 31, 1995, DI assigned to us all of its rights in the Denny's Marks, System and Franchise Agreements. In order that DI could continue to open and operate Denny's restaurants, we granted DI a 30 year license to use the Marks and System. On June 28, 2006, we converted from being a corporation, DFO, Inc., to being a single member limited liability company, DFO, LLC, with DI being the sole member. Al the same lime, Denny's Realty, Inc. converted from being a corporation to being a single member limited liability company, Denny's Realty, LLC (DR), with DFO, LLC being its sole member. We conduct business under our corporate name, use our trade name of Denny's and our agents for service of process are listed in Exhibit B. Our principal business address, as well as that of affiliates DI and DR, is 203 East Main Street, Spartanburg, South Carolina 29319. We have combined the experience of DI with our own experience for purposes of our disclosures in this disclosure document. As of December 31, 2018, DI owned and operated 173 Denny's restaurants in the U.S. under its license agreement with us, and we have 1405 Denny's restaurants operated by franchisees and licensees in the U.S. as well as 131 in other countries.

Business Offered

Denny's restaurants are full service, family-style restaurants that offer and serve a wide variety of food. Denny's restaurants offer a casual dining atmosphere and moderately-priced food designed to appeal to a broad spectrum of customers. We have developed and own a comprehensive system for developing and operating Denny's restaurants, which includes trademarks (Marks), building designs and layouts, equipment, ingredients, recipes and specifications for authorized food products, training, methods of inventory control as well as operational and business standards and policies (the "System"). As part of the full-service brand, we have introduced variants to the business model which include on line ordering for customer pick-up, third party delivery, and in-restaurant ordering through devices in addition to servers. We have variations of the Denny's concept called The Den. This concept may be distinguished from our standard Denny's restaurant by having a unique and modified menu. These concepts may have limited or no table service. Customers may order at a counter and seat themselves. To differentiate from a standard Denny's restaurant, these concepts may have distinct uniforms, POP specific to the concept, trade dress, brand representation and signs. These concepts may appear as a standalone restaurant or in a nontraditional location, including without limitation those described in Item 12. We reserve the right to develop, or license others to develop, The Den as that concept may evolve, in any Territory or trade area where traditional restaurants exist or may be developed, including any exclusive Territory. We offer a 1 O year nontraditional franchise agreement for $10,000. The Franchise Agreement (Exhibit D) grants you the right to develop and operate a single Denny's restaurant (Restaurant) at a specified location using the Denny's Marks and System. In exchange, you agree to pay royalty, brand building and other fees, and to operate the Restaurant in strict compliance with our standards and procedures. You will be required to sign our Payment Card Agreement (Exhibit K) and participate in our Credit Card Program. You will be required to sign the following additional contracts: 1. Supply Chain Oversight Committee Franchisee Participation Agreement (Exhibit F) 2. POS Support Agreement (Exhibit L), and 3. Denny's on Demand Agreement (Exhibit L-1) FOP refers to Franchise Development Program, which is the program under which we sell restaurants we own and establish the initial franchise. If we offer to franchise a DI-owned Denny's Restaurant through FOP, you must sign a Confidentiality Agreement (Exhibit H) and enter into a Franchise Agreement (Exhibit D-1 ). You may also be required to enter into a development agreement with us as well (Exhibit J-2). DI, with our consent, will then sell its interest in the FOP restaurant(s) to you under a Purchase Agreement (Exhibit G) and will sublease or lease to you the premises of the FOP restaurant(s) under a (Sub)Lease (Exhibit I). We may offer you the right to develop one or more Restaurants within a designated geographical area under a development agreement (Exhibit J). In this event, you will be required to enter into a separate Franchise Agreement for each Restaurant under that agreement. Restaurants must be built in accordance with our specifications; see Item 7 for Initial Investment information. Other program details can be found in Item 5 and Item 12 of this Disclosure Document. We may offer you the right to develop one or more Restaurants within a designated geographical area under an HDI agreement (Exhibit J-1). In this event, you will be required to enter into a separate Franchise Agreement for each Restaurant developed under the HDI agreement. Restaurants built under HDI must be built in accordance with our specifications; see Item 7 for Initial Investment information. Other program details can be found in Item 5 and Item 12 of this Disclosure Document. We have made arrangements with our Point of Sale (POS) vendor to sell to you the DINE POS system and software which are used in our company restaurants and most franchise restaurants, with DI providing installation, training, and some maintenance and support. DI may sell an FOP restaurant(s) to a Denny's franchisee as noted above. No other affiliate provides products or services to Denny's franchisees. The principal business address of Denny's Corporation is 203 East Main Street, Spartanburg, South Carolina, 29319. We and the Denny"s Franchisee Association (''DFA") have created a body known as the Supply Chain Oversight Committee ("SCOC") to collaborate on strategic supply chain oversight and improvements for traditional, full-service restaurants within the contiguous 48 United States. You are obligated to enter into a Franchisee Participation Agreement (Exhibit F) in the form approved from time to time by the SCOC. The food service industry is highly competitive and can be affected significantly by many factors, including changes in local, regional or national economic conditions, changes in consumer tastes, and increases in the number of, and particular location of, other restaurants, as the industry evolves.

Initial Fees

You must pay us an initial franchise fee of $30,000 for each Denny's franchise. You must pay the initial franchise fee to us in good funds upon signing the Franchise Agreement. This fee, as described above, unless you sign a franchise agreement under a development incentive program, is uniform to all franchisees and is not refundable, in whole or in part, under any circumstance. The initial franchise fee in 2018 ranged from $0 to $30,000. The range is due to franchise agreements being signed under a development incentive program. The initial franchise fee includes management training for you, your Managing Owner, your Designated Operator, if required (see Item 15), and your managers at an approved training restaurant. You must pay the then current costs associated with the New Restaurant Opening team, including salaries, travel, hotel, and meals for training at your Restaurant as it opens. As of the date of this disclosure document those fees range from $0 to $36,000 depending on the level of assistance provided. (See Item 11 for a complete description of the New Restaurant Opening training.) Therefore, the total amount you must pay to us or our affiliates may range between $30,000 and $66,000, unless you open under a development incentive and do your own New Restaurant Opening training, in which case, the total amount you must pay to us or our affiliates may range from $0 to $20,000. If you execute a Successor Franchise Agreement, you must pay an initial successor franchise fee of $10,000 for a ten-year agreement or $30,000 for a twenty-year agreement. This fee is payable in good funds when you sign the Successor Franchise Agreement. This fee is uniform to all successor franchisees and is not refundable, in whole or part, under any circumstances. The initial franchise fee paid for Successor Franchise Agreements in 2018 was $0 to $10,000 for 10-year agreements and $0 to $40,000 for 20-year agreements. The initial successor franchise fee includes management training for any new Managing Owner, Designated Operator and your managers at an approved training restaurant. If you qualify to sign a Successor Franchise Agreement, you have the option of continuing in business at your existing location by signing the Successor Franchise Agreement that has a ten or a twenty year term. If you execute a Franchise Agreement for The Den by Denny's, you must pay an initial franchise fee of $10,000 for a ten-year agreement. This fee is payable in good funds when you sign the Franchise Agreement. This fee is uniform to all franchisees for The Den and is not refundable, in whole or part, under any circumstances. The initial franchise fee includes management training for you, your Managing Owner, your Designated Operator, if required (see Item 15), and your managers at an approved training location. You must pay the then current costs associated with the New Restaurant Opening team, including salaries, travel, hotel, and meals for training at your Restaurant as it opens. As of the date of this disclosure document those fees range from $0 to $36,000 depending on the level of assistance provided. (See Item 11 for a complete description of the New Restaurant Opening training.) Therefore, the total amount you must pay to us or our affiliates may range between $10,000 and $46,000. If you execute an HDI Agreement, you must pay a development deposit of $10,000, regardless of the number of restaurants to be developed. The deposit is due when you sign the HDI Agreement and is payable in good funds. The deposit is uniform to all franchisees and is not refundable, in whole or in part, under any circumstances. The $10,000 deposit will be applied toward the initial franchise fee of the last restaurant opened under your HDI Agreement. You will pay $10,000 initial franchise fee for each restaurant you open under your HDI Agreement. For each restaurant opened according to its development schedule, you will pay no Royalties and Brand Building Fund Fees for the first two years after opening. Thereafter or otherwise, the Royalty is 4.5% and _the Brand Building contribution is 3%. Sites approved prior to October 1, 2017, do not qualify for HDI. Scrap and Rebuild/Offset Program Under the Scrape and Rebuild/ Offset Program you may request permission to relocate any existing restaurant, including a former company restaurant, to a brand new building built in an approved type in the same trade area. The proposal may be subject to the process in place at that time for approving a new restaurant, including without limitation encroachment impact. Upon approval and completion of construction, you have the right to close the original restaurant and move the Denny's to the new location. To qualify for the Scrape and Rebuild / Offset Program, you must: (a) Identify and have a site approved for the replacement restaurant no later than two (2) years from the Takeover Date for the former company restaurant; (b) Open the Offset restaurant no later than three (3) years from the Takeover Date for the former company Restaurant; and (c) Not have the original and Rebuild/ Offset restaurants open at the same time. If we deem any down time between closing and opening to be too long, we may impose requirements such as training as conditions to reopening. If you satisfy the requirements of the Scrape and Rebuild / Offset Program, you will receive a new Franchise Agreement with no initial franchise fee, and the term of the new Franchise Agreement will begin on the Opening Date of the new restaurant. The term will continue for a full twenty (20) years from the Opening Date of the Rebuild / Offset Restaurant, unless sooner terminated by us as provided for in the agreement. You may carry over any favorable royalty and brand building percentages for a period of time they were available under the original franchise agreement term. Where DI sells an operating Denny's restaurant, you will be required to pay us an initial franchise fee under the Franchise Agreement and pay DI for the restaurant under a Purchase Agreement. You will acquire the equipment, POS equipment, leasehold improvements, furniture, furnishings, signs, small wares, trade fixtures and other fixed assets, the existing inventory of food, beverages, cleaning and operating supplies, and intangible business value. Real property may be available. DI sets the purchase price at its sole discretion, which depends upon factors such as location and sales volume of the Restaurant and the quality and market value of the (real and) personal property. Although Di's sale of the Restaurant to you requires our consent, we will not obtain an independent appraisal for the purchase price, and you are encouraged to independently evaluate the purchase price before you sign the Franchise Agreement and Purchase Agreement. In limited circumstances, DI will finance a portion of the purchase price of a former company Restaurant. We have offered company restaurants under our Operator to Franchisee Program, and provided qualified franchisees with a development credit. The development credit applied to company restaurants purchased within three years of separation of the company, so long as your first purchase was completed in the first year. To qualify for the Operator to Franchisee Program we considered your years of service with Denny's, employee performance rating, and credit rating. We did not sell any restaurants under the Operator to Franchisee Program in the last fiscal year. When you purchase an FDP restaurant, you may be required to make a development commitment under the FDP Development Agreement described in this disclosure document. The standard initial franchise fee applies.

Financing

We are not obligated to do so, but we occasionally offer to finance the purchase of POS systems and other items introduced into the Denny's System. We do not otherwise customarily accept notes or other instruments from franchisees and, accordingly, have not in the past sold, assigned, or discounted to a third party, in whole or in part, any note, contract, or other instrument executed by a franchisee. We have no present intent to sell, assign, or discount notes or instruments in the future to a third party. Neither we nor our affiliates receive revenue or other benefits from any person or entity for the placement of financing. Former Company or FOP Restaurant Financing DI typically will not finance the purchase price, or the initial franchise fee. In limited circumstances, DI may finance a portion of the purchase price of a former company or FOP restaurant. If DI finances a portion of the purchase price of a former company or FOP restaurant, you must execute the form of Promissory Note ("Note") appearing as Exhibit G-1, along with a Security Agreement. Under the Denny's credit card program, all sales at the Restaurant paid with a credit card are remitted directly to DI. After receiving these credit card payments on your behalf, DI subtracts any payments which you may owe to us (including royalties, brand building fees, and any other periodic payments) as well as any amounts which you may owe to DI (including any payments due under a promissory note or sublease executed in connection with your purchase of a former company or FOP restaurant) and remits to you the balance, if any, remaining after subtracting such payments. 1. DI will take a continuing security interest in the financed property (Section 1, Security Agreement), junior to any primary financing from a conventional lender funding the acquisition. Additionally, if DI provides financing to a corporation, partnership, limited liability company or other legal entity, DI will require stakeholders in such entity to execute personal guaranties of the Note. 2. If you default under the Note, DI may take actions, including: (1) declaring the entire debt immediately due and payable; (2) commencing a judicial foreclosure or other action; (3) taking physical possession of the premises of the Restaurant; (4) securing the appointment of a receiver for the financed property. (Section 15, Security Agreement.) We may also terminate the Franchise Agreement for defaults under the Note. (Franchise Agreement 18.1.d.) -Waivers Under the Note, you waive presentment for payment, demand, notice of non-payment, notice of intention to accelerate, and notice of protest. (Promissory Note.) Except as described above, we do not offer financing for the establishment or operation of the Restaurant.

Franchisee Revenue and Profit

The following financial schedule contains information relating to the performance of Denny's restaurants. The information is provided for the purpose of helping you evaluate the potential earnings capability of the Restaurant. The information presented does not represent the actual performance of any single restaurant. The notes following the schedule attempt to explain the information and provide the underlying assumptions. THE NET SALES, GROSS PROFITS, AND EBITDA ARE A COMPILATION OF THE RESULTS OF INDIVIDUAL DENNY'S RESTAURANTS, AND SHOULD NOT BE CONSIDERED AS THE ACTUAL OR PROBABLE NET SALES, GROSS PROFITS, OR EBITDA THAT YOU WILL REALIZE. WE DO NOT REPRESENT THAT YOU CAN EXPECT TO ATTAIN ANY OF THE RESULTS REFLECTED IN THE SCHEDULE. ACTUAL RESULTS WILL VARY FROM RESTAURANT TO RESTAURANT, AND WE CANNOT ESTIMATE OR GUARANTY THE RESULTS OF ANY SPECIFIC RESTAURANT. DI, OUR AFFILIATE, FROM TIME TO TIME SELLS RESTAURANTS TO FOCUS ON HIGHER VOLUME RESTAURANTS IN A SMALLER NUMBER OF MARKETS. THE OPERATING PERFORMANCE OF DI'S REMAINING COMPANY RESTAURANTS WHICH WE PRESENT, AND IN PARTICULAR AVERAGE UNIT VOLUMES AND MAJOR EXPENSE CATEGORIES, ARE UNLIKE RESULTS IN FRANCHISE OPERATED UNITS. ACTUAL SALES AND EARNINGS OF THE RESTAURANT ARE AFFECTED BY MANY FACTORS, INCLUDING YOUR OWN EFFORTS, ABILITY, AND CONTROL OF THE RESTAURANT, AS WELL AS FACTORS OVER WHICH YOU DO NOT HAVE ANY CONTROL. WE DO NOT REPRESENT THAT THE RESTAURANT WILL BE PROFITABLE. II. Sales of Denny's Restaurants For 2018, 1525 Denny's restaurants in the US were open the entire year. We operated 169 restaurants and 1356 were franchised. Restaurants open less than one full year have been omitted, of which there were 4 Company-owned and 32 franchised restaurants. These totals also exclude 17 nontraditional Denny's. The average sales of the franchised and Company-owned restaurants combined was $1,692,000. Franchised restaurants included in the analysis had average sales of $1,615,000. Company-owned restaurants included in the analysis had average sales of $2,310,000. Ill. FDP Restaurant P&Ls If we sell to you a company or FOP restaurant, we will share with you information relating to the historical performance of the restaurant. Typically, this information consists of the profit and loss statement (the "P&L") for the restaurant, which is prepared in the normal course of business by DI, the seller. The P&L is prepared in accordance with generally accepted accounting principles, but ii is not audited. The P&L does not include royalty payments that you will be required to pay under your Franchise Agreement with us. P&L information will be shared with you only after we have come to some preliminary understandings regarding your purchase of the company restaurant, but before you make any binding commitment to purchase the company restaurant under the terms of a Purchase Agreement. The information will be subject to a confidentiality agreement. (See Exhibit H.) n providing P&Ls, we neither represent nor warrant that the level of sales achieved by DI will be the same as the sales which you may achieve. Moreover, various expenses incurred by DI in the operation of the FOP restaurant will likely differ from the expenses you incur. For example, to the extent you borrow funds to acquire the FOP restaurant, the P&L figures will not reflect debt service costs which you will be required to pay. As a consequence, the results of your operation of the former company restaurant will not be the same as the results of operation by DI. Therefore, we strongly encourage you to consult with your financial advisors in reviewing P&Ls for the FOP restaurant, in particular, in estimating the categories and amount of additional expenses which you will incur in establishing and operating the restaurant. IV. New and Emerging Markets Incentive Program The savings estimate of up to $1 million is based on the potential savings of developing, opening, and operating six Denny's restaurants under the New and Emerging Market Incentive Program, in comparison to developing, opening, and operating six Denny's restaurants without the incentive program. See Item 12 of this Disclosure Document for details of this program. The components of estimates regarding potential savings under the New and Emerging Market Program are as follows: Initial Franchise Fee Potential Savings: First Restaurant- pay $15,000 = savings of $15,000 Second Restaurant- pay $15,000 = savings of $15,000 Third Restaurant- pay $10,000 = savings of $20,000 Fourth Restaurant - pay $10,000 = savings of $20,000 Fifth Restaurant - pay $10,000 = savings of $20,000 Sixth Restaurant - pay $10,000 = savings of $20,000 Total = $110,000 Royalty Payment Potential Savings (based on $1,615,000 average franchise restaurant sales volume) 1st year - pay 2% = 2.5% savings= $40,375 2nd year - pay 2% = 2.5% savings = $40,375 3rd year - pay 3% = 1.5% savings = $24,225 4th year - pay 3% = 1.5% savings = $24,225 5th year - pay 3% = 1.5% savings = $24,225 Total = $155,425 $151,145 x 6 restaurants= $920,550 Total Potential Savings= $1,030,550 We reserve the right to select the vendors, specifications, terms and conditions for these services. V. Heritage Development Incentive. Encroachment Impact threshold is 4% for this program Existing Development Agreement must be in good standing. Franchisee will have the ability to transfer development commitments to other qualifying programs. Deal Points $10,000 Franchise Fee per restaurant $10,000 deposit due upon contract execution and is fully earned and non-refundable.