Papa John’s Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$102,000

-

$975,000

OPERATING PROFIT

Unlock

Emily

Updated

February 14, 2024

Is

Papa John’s

a franchise?

Yes,
Papa John’s
is a franchise and
currently
accepts
franchise
applications

Discover the world of Papa John’s, a prominent American pizza chain restaurant with an extensive global presence, boasting over 5,900 stores in all 50 states of the US and spanning across 45 countries worldwide.

With its headquarters in Louisville, Kentucky, Papa John’s came to life thanks to the vision of "Papa" John Schnatter, who laid the foundation in 1984.

At Papa John’s, the essence lies in quick-service dining, where the star of the show is undoubtedly the pizza, accompanied by an array of premium offerings.

While the original concept revolved around carryout and delivery, some of Papa John’s restaurants now provide a welcoming dine-in experience complete with tables and dining chairs.

In 1985, Papa John’s embarked on a franchising journey, propelling the brand's reach even further. Operating under the parent company Papa John’s International, Inc., it has since garnered recognition as the world's third-largest pizza delivery company.

How many

Papa John’s

franchises

are there?

In 2022, there were
3169
outlets in the United States, of which
2649
are franchises, and
520
are corporate-owned.

What are the

Papa John’s

franchise

fees?

Initial franchise fee

$25,000

Royalty fee

5.5%

Advertising fee

8.0%

Initial Franchise Fee ($25,000 for Traditional Restaurant, $5,000 for Non-Traditional Restaurant)

The initial franchise fee for a standard Franchise Agreement with Papa John's is $25,000 for Traditional Restaurants and $5,000 for Non-Traditional Restaurants. This fee is payable upon the execution of the Franchise Agreement.

Royalty Fee (5% of Net Sales, with a possibility of increase up to 6% of Net Sales)

Franchisees are required to pay a continuing royalty fee of 5% of the Net Sales of the Restaurant for each specified period. The royalty rate may be increased by Papa John's at any time, up to 6% of Net Sales, provided that the form of Franchise Agreement being offered to new Papa John's franchisees at the time of the increase provides for the increased Royalty.

Marketing Fund Contributions (5% of Net Sales)

Franchisees are required to contribute 5% of Net Sales to the Marketing Fund. This contribution rate was approved by the members of the Marketing Fund and began on January 1, 2020. If the royalty fee is increased at any time before June 30, 2023, the Marketing Fund contribution rate will automatically revert to 4% of Net Sales.

Local Store Marketing and Advertising (Minimum of 8% of Net Sales)

Franchisees are required to spend a minimum of 8% of Net Sales on Marketing Fund contributions, Cooperative contributions, and local store marketing and advertising.

Digital Fee (1.50% of Net Sales effected through the online and technology-based ordering system)

Franchisees will be required to participate in the online and technology-based ordering system. The Digital Fee is collected only on the amount of Net Sales effected through this system.

How much does

it cost

to start a

Papa John’s

franchise?

It costs between
$102,000
and
$975,000
to start a
Papa John’s
franchise.

The total estimated initial investment for a standard Papa John's franchise ranges from $188,615 to $975,415, while for a non-traditional Papa John's franchise, it ranges from $101,500 to $405,865.

Below is a detailed breakdown of the costs involved in starting a standard restauramt, providing a clear financial picture for potential franchisees:

Type of Expenditures Amount
Initial Franchise Fee $25,000
Real Estate Brokerage Fees $0 to $10,000
GIS New Store Map Package $1,050 to $12,000
Construction/Leasehold Improvements $65,000 to $405,000
Furniture, Fixtures and Equipment $37,000 to $320,000
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
Technology Maintenance Fee $1,125
Signage $8,000 to $30,000
First Month's Rent $1,200 to $5,000
Security Deposit and other deposits, Insurance Premium $500 to $8,500
Opening Inventory and Supplies $3,000 to $10,000
Opening Advertising $3,000 to $10,000
Training Expenses $1,000 to $30,000
Miscellaneous Opening Costs $2,500 to $20,000
Additional Funds – 3 months $15,000 to $50,000
Total $188,615 to $975,415

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.

Does

Papa John’s

provide

training

to its

franchisees?

Yes,
Papa John’s
provides training to its franchisees.

Before opening a restaurant, each franchisee, including the Principal Operator and the management team, undergoes a comprehensive training program.

This program is generally conducted at Papa John’s principal offices, a certified training restaurant, or even at the franchisee's own restaurant. The training is designed to be completed at least 3 or 4 weeks prior to the opening of the first restaurant.

The training program for the Principal Operator is detailed and includes:

  • A minimum of two weeks of operations training at a designated Papa John’s restaurant, ensuring certification in all seven Papa John’s operations stations.
  • Up to five weeks of Manager Development Program (MDP) Prep training, which prepares individuals for shift management.
  • Another five weeks of Manager Development Program (MDP) Basic training, focusing on restaurant management.
  • A maximum of four weeks of Manager Development Program (MDP) Advanced training, further delving into restaurant management.

Does

Papa John’s

provides

territory

protection?

Franchisees are granted the right to operate a Papa John's Restaurant within a defined area referred to as the "Territory." This Territory is typically defined as a one and one-half mile radius of the Location. However, in certain densely populated urban areas, the Territory may be reduced to a one-half mile radius. Within this Territory, franchisees are obligated to develop and operate the Franchised Restaurants. While there are territorial rights associated with the Territory, these rights do not guarantee exclusivity. Specifically, franchisees may face competition from other franchisees or other channels of distribution in the future. The License Agreement does not provide options, rights of first refusal, or similar rights to acquire additional franchises within the Protected Area or contiguous areas.

This means that while franchisees have a designated area to operate, they do not have a broader exclusive territory, and their operations are limited to the designated and approved areas.

Can a

Papa John’s

franchise

be run as

a passive

investment?

Papa John's does not obligate the franchisee to participate personally in the direct operation of the restaurant. However, a designated individual must serve as the "Principal Operator" under both the Development Agreement and Franchise Agreement.

If the franchisee is an individual, they are the "Principal Operator." If the franchisee is a corporation, limited liability company, or partnership, the Principal Operator must own at least a 5% equity interest in the franchisee entity.

Each restaurant must have a manager who has completed the required training programs. If the Principal Operator ceases managing the restaurant and another qualified individual does not assume such obligations, Papa John's may appoint a manager to operate the restaurant for the franchisee's account.

Related Posts