If you’re looking to take a step into the food industry, the Papa John’s franchise is one of the most affordable, accessible businesses to join. It has a lower initial investment than many other restaurants in the fast-food space—and in an effort to attract new franchisees, the brand is currently running several incentives waiving thousands of dollars in fees.
There are plenty of advantages of franchising, particularly when joining one with relatively low upfront costs like Papa John’s. Think of it as a business in a box—not only will you have brand recognition providing a built-in customer base, but you’ll also have the support of the franchisor in the form of advertising, marketing campaigns, and training programs.
Of course, you’ll pay for these benefits in the form of various franchise fees. But even with regular payments to the brand, it’s worth remembering that franchise owners typically face lower risk than owners of independent businesses. Chains like Papa John’s have been tested in dozens of markets all over the world—and while no business is entirely risk-free, there’s a measure of added security in joining a known, profitable franchise.
Curious about what it takes to open a Papa John’s restaurant? Let’s get cooking.
About the Papa John’s Brand
First, let’s take a moment to brush up on the history of the Papa John’s brand. The company was founded in 1984 by John Schnatter, who opened his first pizza shop in the back of his father’s bar in Jeffersonville, Indiana (in a broom closet, as legend has it). The company grew rapidly through the 1990s, going public in 1993 and opening 1,500 stores by 1997. Today, the company has over 5,000 locations around the world, around 4,450 of which are franchised. It employs approximately 18,000 people, and each unit (or store) generates approximately $875,000 in annual revenue.
While the chain received some negative press in mid-2018 due to statements made by Schnatter, the company has since had a change in leadership (bringing on former Arby’s president Rob Lynch as CEO), and remains one of the most profitable pizza chains in the fast-food industry.
How to Open a Papa John’s Franchise
If you’re still interested in learning more about opening a Papa John’s franchise, here are the steps to consider.
1. Make Sure You Meet the Requirements
So what does it cost to become a Papa John’s franchisee? Before you even begin to consider fees, you’ll need to take a look at your net worth—the minimum to open a Papa John’s franchise is $250,000, with $75,000 in liquid assets. You also need to be able to obtain financing up to $275,000.
This requirement exists to show the franchisor that you have the capital to support your business and indicates that you know how to manage money. Papa John’s isn’t alone in this; most franchisors have a net worth requirement, many even higher. Bear in mind that if you plan to open more than one Papa John’s franchise, the minimum goes up—four to 10 units have a $1 million net worth minimum, and over 11 requires $2 million. In those cases, it’s common for a group of investors to work together.
One other note: While some brands prefer to work with owner-operators who have food industry experience, Papa John’s does not require that you have a background in quick-service restaurants in order to become a franchisee. They do prefer applicants who have some restaurant or retail experience, as well as those with business management experience.
2. Consider Development Opportunities
As part of your initial research, be sure to take a look at the availability page of the Papa John’s website. This is where you’ll find development opportunities in your state, with potential restaurant locations identified as either traditional markets (like a larger town or city) or non-traditional (i.e. small towns).
The non-traditional umbrella includes venues like airports, travel plazas, universities, and hospitals (see a longer list here). However, these likely fall under a separate incentive program, if applicable.
3. Calculate the Cost
The Papa John’s franchise cost will be a significant factor in whether you pursue this business opportunity. Papa John’s charges an initial $5,000 franchise fee per unit. The standard royalty fee is franchisees is 5% of net sales, payable monthly. Additionally, franchisees are required to pay 8% of their net monthly sales to the company for marketing fees.
This franchise requires a substantially lower minimum investment than many other fast-food restaurants. For example, McDonald’s charges an initial franchise fee of $45,000, with the total cost of investment typically running between $1 million and $2 million. Pizza Hut has a $25,000 franchise fee and much higher net worth requirements ($700,000, with $350,000 in liquid assets).
Franchise fees aren’t the only costs you need to think about when considering opening a Papa John’s. You need to look at the total operating costs of running a store, including food costs, labor costs, supplies, and rent for your location. Consider speaking with other Papa John’s franchisees as part of your fact-finding mission when it comes to projecting costs and profits.
4. Submit an Application
If you decide to pursue a franchisee role with Papa John’s, you’ll need to submit an application. After you submit your application (which you can take a look at here), you’ll have an initial call with a Papa John’s franchise representative, followed by a possible request for additional information to decide whether you’re a good fit for the franchise. This could be as simple as a resume or a bit more involved, like financial statements or a business plan.
After that, you’ll have more operational interviews, a visit to the brand’s corporate headquarters, and another approval process with the franchise review board. If you pass the initial qualifiers, you’ll receive the franchise agreement to review. Not only should you read this closely, but you should also have a legal professional review it to make sure everything looks good.
During this process, don’t forget that you are also trying to decide if Papa John’s is the right franchise for you. Consider reaching out to current and former franchisees to learn more about their experiences with the brand, and don’t be afraid to ask questions. If everything looks good, you’ll sign the franchise agreement and will officially be a part of the Papa John’s brand.
5. Seek Financing
With so many franchise costs to cover, you may need to look into franchise financing options before signing your franchise contract and finalizing your agreement.
There are a number of different types of business loans aimed at helping entrepreneurs get their businesses off the ground. You may want to consider traditional bank financing, SBA loans, or alternative lenders to find the capital you need.
Keep in mind, financing can be hard to obtain as a new business owner; however, since franchises are less risky than brand-new businesses, you may have better luck obtaining the funding you need. Also, be sure to ask the franchisor about any financial assistance they provide during our discovery process. Even if Papa John’s doesn’t provide financing themselves, they may have partners they can refer you to.
6. Complete Your Training
After you’ve paid your first franchise fee and chosen a location, you’ll be required to attend six to eight weeks of training sessions at a certified Papa John’s location and the “Papa John’s University” facility in Louisville, Kentucky. Investors planning on opening multiple locations may need to take a separate course focused on the nuances of multi-unit management. Whatever the case, these trainings will provide additional background on how to maximize your profits as part of the Papa John’s system, and you’ll need to participate whether you’re planning on actively managing your restaurant or watching from the sidelines as an absentee owner.
And, training doesn’t end when you complete these initial sessions. You and your restaurant managers may be required to attend additional training on a timetable determined by the franchisor. Finally, all team members working in your restaurant must complete a basic orientation program and become certified to work at a minimum of three of the seven operations stations within a Papa John’s restaurant.
The Bottom Line
As you can see, buying a franchise isn’t a decision to make lightly. While it may be easier and less risky to buy into a franchise than to start a business from scratch, there is still plenty of research to do, factors to weigh, planning to complete, and financing to seek.
Remember to take your time during the interview process to ask the franchisor all your questions and speak with other franchisees to make sure you understand every aspect of opening and maintaining a Papa John’s franchise. For more guidance, our guide to buying a franchise restaurant can help. While Papa John’s may have lower upfront costs than other food franchises, it’s still a significant investment. Make sure you’re up to the task before taking on the commitment.
Christine Aebischer is an editor at JustBusiness and Fundera.
Previously, Christine was an editor at the financial planning startup LearnVest and its parent company, Northwestern Mutual. There she wrote and edited on topics such as debt, budgeting, insurance, taxes, investing, and retirement. She has written for print and online on topics ranging from personal finance to luxury real estate.