It has never been cheaper to open a Papa John’s restaurant.
The company is going through a period of massive growth and plans to open roughly 200 restaurants annually for the next several years, according to an investor presentation earlier this year.
Now Papa John’s is trying to recruit franchisees to open those restaurants, so it’s offering huge discounts to potential operators in the US.
The cost of franchising a Papa John’s restaurant is already relatively cheap, compared to other fast food restaurants like McDonald’s or Taco Bell.
The company says operators can open a unit with an investment of less than $250,000. By comparison, McDonald’s requires at least $955,000 in startup costs and Taco Bell requires a minimum investment of $1.2 million.
But Papa John’s restaurants generate less revenue per unit than most top fast food brands.
The pizza restaurants generate an average of $1.1 million in sales per unit annually, according to QSR Magazine. The company ranks 31st for its sales per unit in the magazine’s list of the top 50 fast-food chains.
In order to open a Papa John’s restaurant, potential franchisees must have at least $250,000 in net worth.
The company also charges a one-time franchise fee of $25,000 for new restaurants.
Franchisees then have to pay the company two ongoing monthly fees — one royalty fee equal to 5% of net sales and a charge for advertising equal to 8% of net sales.
But as Papa John’s looks to grow in the US, it’s temporarily waiving some of those fees.
The company is waiving the $25,000 fee for new domestic franchisees, providing them with a free set of ovens for every unit, and reducing the royalty fees for their first four years of operation.
For the first year, the fee is 1% of sales. Then the fee increases by one percentage point every year until it reaches 5%.
Papa John’s says the incentive package is worth roughly $60,000.
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