fbpx
Submit
Feedback

Papa John’s Franchise Cost, Fees, and Profit

Written by: Brooks Gammill
Last Updated: November 10, 2021
Free Download Our Exclusive Food and Beverage Industry Guide
Download Now
Papa John's storefront featured image

Papa John’s Franchise Information

Papa John’s is a quick service restaurant devoted primarily to the sale of pizza and other related food products. The majority of these restaurants are franchised, and operators of Papa John’s are considered independent contractors.
Papa John’s is a Delaware corporation incorporated on July 25th, 1991. It was originally founded in 1984 by Bam Inc., an Indiana corporation which operated a restaurant and tavern. In 1985, Papa John’s Pizza was acquired by Schnatter & Ehringer Inc. In 1989, Schnatter & Ehringer Inc. changed their name to Papa John’s International, Inc., but are referred to as PJ Indiana in the FDD. In 1991, PJ Indiana was merged with Papa John’s, changing their corporate location from Indiana to Delaware. As a result of the merger, PJ Indiana ceased to exist.

This article provides insight about Papa John’s franchised units. As of 2019, according to their 2020 FDD, there are 3,142 Papa John’s domestic restaurant units, of which 2,544 are franchise operated. The remaining 598 units are owned and operated by the company. It is also important to note that Papa John’s owns a majority interest in multiple franchises, including one franchisee that operates 86 restaurants, one franchisee that operates 94 restaurants, and one franchisee that operates 4 restaurants.

papa john's logo storefront

How Much is a Papa John’s Franchise? 

What is the initial fee for a Papa John’s Franchise? 

$25,000


Papa John’s charges $25,000 for the initial fee.

Papa John’s Franchise Cost

The total investment necessary to begin operation of a standard Papa John’s franchise is from $130,120 to $844,420.

Additional Cost Breakdown

Initial Franchise Fee$25,000
Opening Inventory$23,420 – $73,920
First Month’s rent$1200 – $5000
Security Deposit and other deposits, Insurance Premium$500 – $8,500
Real Estate Brokerage Fees$0 – $10,000
Furniture, fixtures, and equipment$68,000 – $120,000
Construction/Leasehold Improvements$50,000 – $500,000
On-site Installation Fee$0 – $5,000
Signage Fee$3,000 – $20,000
Training Expenses$1,000 – $15,000
Misc. Opening Costs$2,500 – $20,000
Additional Funds (3 months)$15,000 – $50,000

Ongoing Franchise Costs and Fees:

*paid on a monthly basis*


Help Desk Service Fee: $0 – $1,000


Technology Maintenance Fee: $0-420

Advertising and Marketing Payments

Papa John’s opening advertising fee can be anywhere from $3,000 to $10,000. The local advertising fee is a minimum 8% of net sales and must be spent on a monthly basis. Papa John’s franchisees are also expected to make additional marketing contributions. For the marketing fund contributions, there is a maximum of up to 3% of net sales, payable on the 24th day of each month. Papa John’s also gives franchisees the opportunities to participate in advertising cooperatives, or groups of Papa John’s restaurants in the same area that agree to collective advertising efforts. If part of a cooperative, franchisees are expected to contribute a minimum of 2% of net sales.

How Much Do Franchise Owners Make?

How Much Does a Papa John’s Franchise Make in a Year? 

At the end of 2019, there were 3,288 total domestic Papa John’s restaurants, 598 were company owned, including franchises in which Papa John’s had a majority interest (a total of 193 restaurants). However, the financial performance representations in their FDD only included standard or “traditional” restaurants that were open for the whole of 2019.


There are 2,341 franchised restaurants represented in the FDD’s financial data, and their sales figures are included below:

 

Average Sales — Franchised Restaurants: $837,495

Median Sales — Franchised Restaurants: $798,589
 

Range of Sales — Franchised Restaurants: $191,606 – $2,547,454


In 2019, 1,045 units, 44.6% of the total franchises included in the above data, achieved sales revenue of $837,495 or greater.

Papa John’s Franchisor Income Statement

Income Statement (thousands of dollars)

Year Ended
December 29, 2019December 30, 2018December 31, 2017
Revenues   
Domestic company owned restaurant sales$ 652,053$ 692,380$ 816,718
North America franchise royalties and fees71,82879,293106,729
North American commissary revenues612,652609,866673,712
International revenues102,924110,349114,021
Other revenues179,791170,98372,179
Total revenues$ 1,619,248$ 1,667,871$ 1,783,359
Costs and expenses   
Operating costs (including depreciation and amortization shown separately below):    
Domestic company owned restaurant expenses$ 26,237$ 77,658$ 664,640
North America commissary expenses569,180575,103631,537
International expenses57,70267,77570,622
Other expenses175,592170,55669,335
General and administrative expenses223,460193,534150,866
Depreciation and amortization47,28146,40343,668
Total costs and expenses1,559,4521,631,0291,630668
Refranchising and impairment gains (losses) net4,739(289)(1,674)
Operating income24,53531,553151,017
Investment Income1,104817608
Interest expense(20,593)(25,673)(11,283)
Income before income taxes5,0466,697140,342
Income tax (benefit) expense(611)2,62433,817
Net income before attribution to noncontrolling interests5,6574,073106,525
Net income attributable to noncontrolling interests(791)(1,599)(4,233)
Net income attributable to the company$ 4,866$ 2,474$ 102,292
Calculation of net (loss) income for earnings per share$ 4,866$ 2,474$ 102,292
Net income attributable to the company(12,499)—-—-
Preferred stock dividends and accretion12,499—-—-
Change in noncontrolling interest redemption value —-—-1,419
Net income attributable to participating securities—-—-(423)
Net (loss) income attributable to common shareholders$ (7,633)$ 2,474$ 103,288
Basic (loss) earnings per common share $ (0.24)$ 0.08$ 2.86
Diluted (loss) earnings per common share $ (0.24)$ 0.08$ 2.83
Basic weighted average common shares outstanding 31,63232,08336,083
Diluted weighted average common shares outstanding 31,63232,29936,522
Dividends declared per common share $ 0.90$ 0.90$ 0.85
Net income before attribution to noncontrolling interests $ 5,657$ 4,073$ 106,525
Other comprehensive (loss) income, before tax    
Income tax effect 2,10378(2,221)
Other comprehensive (loss) income, net of tax (7,042)(571)3,770
Comprehensive (loss) income before attribution to noncontrolling interests (1,385)3,502110,295
Less: comprehensive loss (income), redeemable noncontrolling interests519488(2,195)
Less: comprehensive (income), nonredeemable noncontrolling interests (1,310)(2,087)(2,038)
Comprehensive (loss) income attributable to the Company $ (2,176)$ 1,903$ 106,062

Income Statement Key Insights

In the past, Papa John’s was a relatively profitable company, although it has experienced a significant drop in revenue over the past three years. In particular, Papa John’s struggled financially in 2018 due to a controversy with their founder, which in turn led to a restructuring of leadership and finances. Franchisees have not yet fully recovered the loss in sales or customers that this issue caused, which has proven to be problematic for the financial health of the company as a whole.

Papa John’s Franchise Competition

Papa John’s has many competitors in the pizza franchise industry and the fast food industry. This includes Domino’s, Little Caesars, and Pizza Hut, as well as Burger KingMcDonalds, and Wendy’s. On top of all this, Papa John’s franchisees have to compete with other Papa John’s franchises in nearby locations.

Conclusion

The toll of the 2018 controversy has been significant on franchisees, according to one article published in 2019 by Restaurant Business. The pizza market is extremely competitive, with the determining factor for consumer loyalty being price. If franchisees are already struggling due to a low volume of sales, offering discounted prices to compete with other names in the industry could be even more damaging.
Although Papa John’s has made efforts to provide financial relief to their operators by easing royalty payments, the article estimates that Papa John’s domestic franchisees earn about $40,000 before interest, taxes, depreciation, and amortization (EBITDA), a relatively low number compared to others in the industry like Domino’s Pizza.
Interested in investing in a pizza franchise or a similar concept? Make sure to check out the numerous other businesses offered on Vetted Biz and the Food and Beverage industry.

 

How about listening to this article in Podcast format?
Check it out! Click and stay tuned!

Franchise Findings Podcast

Franchise Findings Apple Podcast

Latest Articles

Your CBD Store Franchise

Your CBD Store Franchise

Wahlburgers’ Franchise Opportunities

Wahlburgers’ Franchise Opportunities

Burger King Franchise Revenue of $1M+ worth the high Franchise Cost?

Burger King Franchise Revenue of $1M+ worth the high Franchise Cost?

Firehouse Subs Franchise Cost Worth Opening One?

Firehouse Subs Franchise Cost Worth Opening One?

Huntington Learning Center Review

Huntington Learning Center Review

Submit Feedback