Papa Murphy’s Franchise Costs $367K – $670K (+ 2024 Profits)
Papa Murphy’s, founded in 1981, is the largest take-and-bake pizza chain in the United States. It was born from the merger of two local take-and-bake pizza companies, Papa Aldo’s Pizza and Murphy’s Pizza, in 1995. The company is headquartered in Vancouver, Washington, and operates hundreds of locations across the United States, Canada, and the UAE.
As a leader in the take-and-bake segment, Papa Murphy’s has carved out a unique niche in the $46 billion pizza industry by allowing customers to assemble their fresh pizzas in-store to take home and bake themselves. Papa Murphy’s differentiates itself by focusing on high-quality, fresh ingredients. All pizzas are made with hand-sliced veggies, freshly grated mozzarella, and butcher-quality meats.
The dough is made from scratch daily, contributing to a fresher, homemade pizza experience that stands out from conventional frozen or hot-delivered pizzas. This approach not only caters to the taste preferences of consumers but also to their growing demand for convenience without sacrificing quality.
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Initial investment
Here’s what you can expect to spend to start a Papa Murphy's franchise.
| Type of Expenditure | Amount |
|---|---|
| Initial or Subsequent Franchise Fee | $15,000 – $25,000 |
| Lease and Utilities Deposits and Payments | $3,000 – $7,500 |
| Leasehold Improvements | $139,000 – $278,000 |
| Signs | $9,000 – $25,000 |
| Stamped Architectural Drawings | $6,250 – $9,350 |
| As Built Survey | $2,500 – $3,700 |
| Opening Package (including Equipment and Supplies), décor, cabinets, point-of-sale system and smallwares | $150,114 – $220,448 |
| Miscellaneous Development Service Fees | $0 – $1,270 |
| Inventory | $5,000 – $7,000 |
| Initial Marketing Fees and Expenses – 6 months | $15,000 |
| Franchise Premises Rent – 3 months | $9,000 – $11,700 |
| Materials and Supplies | $500 – $2,000 |
| Operations In-Store Training, Enterprise Solution Training and Foundations Class | $0 – $750 |
| Travel and Living Expenses for In-Store Compatibility Check, Operations In-Store Training, Enterprise Solutions Training and Foundations Class | $1,180 – $9,305 |
| Employee Training | $500 – $1,500 |
| Insurance – 3 months | $375 – $1,175 |
| Bookkeeping/Payroll Service – 3 months | $825 – $1,800 |
| Additional Funds, Working Capital, and Miscellaneous Expenses – 3 months | $10,000 – $50,000 |
| Total Estimated Initial Investment | $367,000 – $670,000 |
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
Here are the main ongoing fees the franchisor will ask you to pay going forward to run the franchise.
Initial Franchise Fee
If this is your first franchise, you will pay a nonrefundable Initial Franchise Fee of $25,000 upon signing the agreement. If you are an existing franchise owner and the franchise is being purchased by the same legal entity or principal owner, the fee is $15,000.
Royalty Fee
You will pay a royalty fee equal to 5% of your Net Sales.
Marketing/Advertising Fee
You will pay a marketing fee of 2% of your Net Sales to be placed in a marketing fund (Brand Marketing Fund).
Technology Fee
Fees related to online or digital ordering systems are current and subject to change, with potential increases up to 5% per 12-month period. Specific fees for participation in digital or online ordering were not detailed.
Lease or Rent Fee
The document did not provide specific figures regarding lease or rent fees. These are generally negotiated directly with landlords and can vary significantly.
Transfer Fees
The transfer fee is $25,000, less $2,500 for each full year remaining on the initial term of the agreement. For existing franchise owners transferring a franchise, the fee starts at $15,000 and is reduced by $1,500 for each full year remaining.
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Franchise pros and cons
The Pros:
- Brand popularity: Papa Murphy’s is not an ordinary name in the pizza industry. For over 40 years, the brand has served millions of customers, proving itself as a leading take-and-bake pizza chain in the US. Franchisees are assured of a large customer base that identifies with the brand and what it offers.
- Simple to operate: Since Papa Murphy’s franchise model is on a takeout basis, there are no ovens, freezers, or dine-in costs. This leaves the franchisees with the sole responsibility of perfecting the quality of the pizza they offer.
- Quality pizzas: The brand offers high-quality, non-frozen pizzas by utilizing freshly prepared ingredients, which are done in-house daily: hand-sliced fresh veggies, freshly grated mozzarella cheese, quality meat, and making their dough from scratch. This gives it a great competitive advantage over its competition.
- Training and support: The chain offers extensive training and support to equip franchisees with basic restaurant operations and management skills. Its team of real estate experts helps franchisees with site selection, design, and construction of the restaurants. Also, it has a launch and grand opening program in place to help with the launch of the store and design printed, and online advertising for the continuous promotion of the local store.
- No prior restaurant experience is needed: A Papa Murphy’s franchise is a good option for those who lack experience in the restaurant industry. It provides new franchisees with all the basics necessary for starting and running a successful take-and-bake pizza restaurant.
- Less labor and space: The franchise does not require an oven or freezers, so it does not require much space for its establishment. Additionally, it may also require less labor because the pizzas are baked outside the store.
Cons
- No financial assistance: The franchisor does not offer any financial assistance to its franchisees. New franchisees need to find ways of funding their restaurants, such as third-party financing.
- No exclusive territory protection: The franchisor does not guarantee its franchisees an exclusive territory of operation. Therefore, franchisees may face competition from other Papa Murphy’s restaurants or competitive brands controlled by the franchisor.
- No baked pizzas: The chain does not offer baked pizzas. Therefore, it is not a good option for those looking for a baked pizza dining experience. It also lacks a delivery system, leaving room for possible future competition should a rival arise.
How to open a Papa Murphy’s Franchise
Opening a Papa Murphy's franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Papa Murphy's franchise.
1: Evaluate Fit and Interest
- Understand the Brand: Familiarize yourself with Papa Murphy’s take-and-bake concept to ensure it aligns with your business expectations and lifestyle.
- Research the Market: Assess your local market to determine the demand for take-and-bake pizza and potential competition.
2: Contact Papa Murphy’s
- Initial Inquiry: Complete the franchise inquiry form on the Papa Murphy’s franchising website to express your interest.
- Receive Information: Obtain detailed information about the franchising process, costs, and requirements from a franchise representative.
3: Financial Qualifications
- Financial Requirements: Ensure you meet the financial criteria, which typically includes a minimum net worth and liquid capital.
- Review Investment Costs: Understand the total investment required, including the franchise fee, setup costs, and ongoing expenses.
4: Apply for the Franchise
- Formal Application: Submit a formal application, providing detailed financial information and your business background.
- Approval Process: Await approval, which may involve background checks and interviews to assess your suitability as a franchisee.
5: Training and Development
- Attend Training: Participate in Papa Murphy’s comprehensive training program, which covers product preparation, store operations, and customer service.
- Operational Training: Gain hands-on experience at an existing Papa Murphy’s location to understand daily operations.
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.
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