Papa John’s Franchise Cost, Fees, and Profit

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 salesThe total amount in dollars made in the business before expenses are deducted. See also Gross Revenue. 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 StatementOne of the major financial statements focused on a business’s revenues and expenses in a particular period. It is also known as the profit and loss statement. The income statement includes the gross profit, earnings before tax, and net profit.Tax Returns: The forms a business…

Income Statement Key Insights

In the past, Papa John’s was a relatively profitableWhen the earnings in a given period of time is more than the expenses in a business. 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 King, McDonalds, 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.
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