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Papa John’s Franchise Costs $110K – $989K (+ 2024 Profits)

Here’s what you need to know if you’re interested in opening a Papa John’s franchise.

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KEY FRANCHISEE INFORMATION

Here are the most important stats to know for franchisees.

NUMBER OF LOCATIONS

3220

INITIAL INVESTMENT

$110,000 – $989,000 

ROYALTY FEE

5% to 6%
revenue

REVENUE PER YEAR

$1,135,000

Papa John’s, one of the largest pizza delivery chains globally, was founded in 1984 by “Papa” John Schnatter in the broom closet of his father’s tavern in Jeffersonville, Indiana. From these humble beginnings, the brand has grown exponentially, with its headquarters now based in Louisville, Kentucky.

Papa John’s began franchising in 1985, just a year after opening its doors, which kickstarted its rapid expansion both nationally and internationally.

Papa John’s stands out in the competitive pizza market with its commitment to “Better Ingredients, Better Pizza.” This philosophy has resonated well with customers, underpinning the brand’s emphasis on quality. The company prides itself on using superior-quality ingredients, which has helped it carve out a significant niche in the pizza industry.

Number of locations

TOTAL UNITS
3220
FRANCHISED UNITS
2689

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Initial investment

ExpenditureAmount (Standard Restaurant)
Initial Franchise Fee; Development Fee Deposit$5,000 to $25,000
GIS New Store Map Package$1,050
Construction/ Leasehold Improvements$120,000 to $493,000
Furniture, Fixtures and Equipment$77,000 to $252,000
Information System$20,000 to $30,000
On-Site Support Fee$2,500
On-Site Installation Fee$2,000 to $5,000
Help Desk Service Fee$240
Software Maintenance Fee$1,125
Signage$7,300 to $36,000
First Month’s Rent$1,200 to $5,000
Security Deposit and other deposits, Insurance Premium$500 to $8,500
Opening Inventory and Supplies$6,000 to $15,000
Opening Advertising$3,000 to $10,000
Training Expenses$1,000 to $30,000
Miscellaneous Opening Costs$5,000 to $25,000
Additional Funds – 3 months$20,000 to $50,000
Total Estimated Initial Investment$273,000 to $989,000

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.

Franchise fees & Royalties

Initial Franchise Fee

The Initial Franchise Fee is $25,000, which is fully earned and non-refundable upon the execution of the Agreement.

Royalty Fee

The continuing royalty is 5% of Net Sales, payable monthly.

Marketing/Advertising Fee

The Marketing/Advertising Fee for Papa John’s is set at 6% of Net Sales, beginning April 1, 2024, and continuing until December 30, 2029, unless the initiative is repealed or changed earlier by a vote of the members of the Marketing Fund.

Technology Fee

The Digital Fee is 1.5% of Net Sales via digital/Internet online ordering, including aggregator orders, payable monthly.

Transfer Fees

The Transfer Fee is $4,000, or if the transfer involves multiple restaurants to more than one unaffiliated transferee, it is $4,000 per transferee. If transferring multiple restaurants to more than one affiliated transferee, the total fee is $8,000.

Renewal Fees

The Renewal Fee is $4,000, and $1,000 for non-traditional restaurants, due upon signing the renewal franchise agreement.

revenue

Revenue & Profits

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Franchise pros and cons

The Pros:

  • Proven business strategy: The Papa John’s franchise has been successful and strong for over 35 years. And it has stayed true to its culture of using the finest ingredients to produce well-crusted, original pizzas that thrust them into the limelight. As a new franchisee, you are guaranteed a business model that works for your business and success.
  • Quality products: Papa John’s is well known for its emphasis on the quality of its pizzas. It has been ranked among the top national pizza restaurants for high-quality products and customer satisfaction. This helps it stand out from the competition, and customers will identify with new franchisees who want to enjoy this quality, crispy pizza.
  • Global presence: Papa John’s has a presence in more than 45 countries globally. The brand is highly recognizable, and new franchisees can easily market their businesses to a wider market.
  • Franchise assistance: The franchisor may offer franchisees applying for multiple units the opportunity to acquire restaurant equipment on a 48-month lease. This is done by signing a development franchising agreement with its affiliate, PJUSA. The lease takes a huge financial burden off the shoulders of new franchisees.
  • Strong brand: Papa John’s brand has had steady growth and keeps growing. Having more than 5,000 restaurants means the brand has great potential for new franchises to thrive. New franchisees are assured of a reliable franchise partner trusted by customers and investors.
  • Solid training and support: Papa John’s offers new franchisees extensive training and franchise support. They have a detailed six-to-eight-week managerial and profit-enhancing program. Franchisees, especially those without prior experience, also get access to a pool of resources, such as franchise businesses and specialists, to give them insightful ideas on how to succeed.
  • Passive investment: A Papa John’s franchise can be a good option for an investor looking for a passive investment. It allows franchisees to be absent from the management of their businesses. As a new franchisee, you can appoint a designated franchise manager as you pursue other interests.

The Cons:

  • Competition: The pizza industry is growing very fast. As a result, Papa John’s has faced stiff competition from major brands such as Pizza Hut. As a franchisee, you may not make huge profits.
  • Negative reputation: Although Papa John’s is a popular and big brand, its reputation was negatively impacted by the remarks of its former CEO, John Schnatter in 2018 – 2019. His remarks were a challenge for new franchisees, forcing them to employ extra marketing efforts to restore their image and maintain their stability and growth.
  • Financing challenges: The franchisor does not offer financial assistance to its franchisees. It also does not guarantee any franchisee’s note, lease, or obligation.
  • Expensive marketing strategy: The parent company enforces mandatory marketing for new franchisees. This means they can’t source cheaper local marketing talent in their territories. Therefore, franchises must adopt the marketing strategy of the parent company, which affects their profitability.

How to open a papa john’s franchise

1: Evaluate Your Qualifications

  • Financial Requirements: Ensure you meet the financial requirements for initial investment, including liquid assets and net worth.
  • Experience: Experience in restaurant management or ownership is preferred but not mandatory.

2: Submit a Franchise Inquiry

  • Initial Inquiry: Contact Papa John’s through their franchise development website to express interest and request detailed franchising information.
  • Receive Franchise Information: Review the franchising details provided by Papa John’s, including the investment breakdown, potential locations, and support structure.

3: Complete the Application Process

  • Application Form: Fill out the franchise application form, providing personal and financial details as required.
  • Background Check: Undergo a background check as part of the pre-qualification process.

4: Review Franchise Disclosure Document (FDD)

  • Obtain FDD: Carefully review the Franchise Disclosure Document which outlines the roles, responsibilities, and legal obligations of a franchisee.
  • Legal and Financial Consultation: It’s advisable to consult with a lawyer and a financial advisor to understand the implications of the FDD.

5: Attend Discovery Day

  • Visit Headquarters: Attend a Discovery Day at Papa John’s headquarters to gain a deeper understanding of the operational aspects and corporate culture.
  • Meet Key Personnel: Interact with key Papa John’s personnel to discuss potential challenges and strategies for success.

6: Secure Financing

  • Financing Options: Explore financing options if necessary, which may include loans, partnerships, or other financial instruments.
  • Approval of Financing: Ensure your financing plan meets the requirements and is in place to cover the initial investment and start-up costs.

7: Sign the Franchise Agreement

  • Agreement Review: Review and sign the franchise agreement, which legally formalizes your commitment and investment with Papa John’s.
  • Franchise Fee: Pay the initial franchise fee to confirm your territory and begin the establishment process.

8: Training and Site Selection

  • Comprehensive Training: Undergo comprehensive training covering all aspects of Papa John’s operations, from food preparation to staff management and customer service.
  • Select a Location: Choose a location approved by Papa John’s that meets the company’s demographic and logistical criteria for success.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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