Papa John's Pizza Franchise Review
In 2018, Papa John's was the fourth largest pizza chain in the U.S. With over 5,000 units worldwide, and relatively low start-up costs, it becomes easy to see what makes a franchise in the company so desirable.
Papa John's Franchise Information
The company makes it easy to get started with a franchise. As of mid-2018, initial investment is low, and with significant backing from the company itself, a franchise seems an investment worth consideration.
- Business Established: 1984
- Franchising Since: 1986
- Initial Investment: As little as $300,000
- Required Net Worth: $250,000, with a minimum of $75,00 in liquid assets
- Franchise Fee: $25,000 (though incentive programs exist)
- Sales-to-investment ratio: $879,794 as of 2016
International milestones include landmark 100th store openings in the U.K. and China in 2008, plus the franchise's very first store opening in Amman, Jordan. Papa John's is taking full advantage of their website.
Background and Benefits
Papa John's offers a surplus of support to help franchisees become successful. These resources include a team of franchise business directors, regional marketing directors, and operations specialists that analyze all facets of your franchise business from the inside out.
This includes site selection assistance, IT Systems, risk (insurance) services, and quality management. Papa John's also offers their exclusive PJ Food Service as the franchisee's one-stop shop for nearly all the ingredients and supplies that franchisees will ever need, including paper items and even cleaning supplies. Access to this service is one of the reasons the franchises are so profitable, since the generalized supply chain keeps costs extremely low.
How Much Does a Papa John’s Franchise Cost?
Papa John's will tell you up-front that you can have as many units as you want, so long as you have the net worth to purchase and support them. Minimum net worth for one unit is $250,000. Four to 10 units are $1 million, and 11-plus units require $2 million in net worth, and are generally purchased by a group of like-minded investors.
Liquid assets consisting of cash and/or readily available financing should total at least $250,000 for any number of units, they don't scale. Other qualifiers include at least one partner, a successful business management background, and close proximity to the location chosen.
The franchise fee is low at $25,000 with an ongoing standard royalty fee of five percent of net sales that is payable monthly. You must devote at least eight percent of your monthly sales to advertising and marketing.
The estimated investment is about $300,000 for an average unit of 1200-1400 square feet located in a strip center. This can vary considerably, but the majority of franchises are built upon this model, and it is a good baseline to build off of.
Positive Aspects of a Franchise
Papa John's Pizza is relatively simple to get into compared to other restaurant franchises. The net worth requirement is reasonable, and the royalty is a standard five percent that's renewable every 10 years.
Absentee ownership is doable, and Papa John's actually encourages it you don't have QSR experience. However, the company does offer a six-eight initial training program in exchange for that franchise fee, and the experience can be particularly valuable whether you want to be a hands-on owner or stand in the wings. Ongoing training is available for both you and your team.
The standard franchise fee may be waived in 2017 as part of a special incentive offered by Papa John's. Royalty fees may be reduced over the first four years as well dependent on profit and what incentive programs exist at the time.
Negative Aspects of a Franchise
About the only real con, the obligatory marketing budget takes a measure of control and flexibility out of an owner's hands. It fails to take into consideration that you might be able to hire a talented marketing firm at a lower price. This aspect is sure to factor into the brands low franchise percentage fee, since many star marketing directions could be taken for a lower price than the Papa John's fee dictates.
The low upfront cost, net worth requirements, and fees associated make a Papa John's franchise seem like a worthwhile investment for the affluent investor. There are factors outside of the brand, such as location and competition, that will affect a franchises bottom-line, but it is hard to find a franchise that boasts both incredible brand power at such an affordable start-up price.