How the Franchise Model Works for Papa John’s

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Papa John's Restaurant
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Opening a franchise can be a great way to invest in your success and find a path to financial freedom. Papa John’s has been a popular franchise option since it first opened in the 1980s. Today, there are over 5,000 locations in the U.S. and around the world. If you are interested in franchising a Papa John’s restaurant, it is important to know what to expect.

How Franchising a Papa John’s Restaurant Works

The good news for potential franchise owners is that the new Papa John’s CEO and his leadership team are targeting a major unit expansion based on rising sales. Of course, being interested in opening a franchise is not enough.

Before you start, you will have to make some investments to open your location (more on the costs below). This includes leasing real estate, purchasing equipment, making changes to the location and similar costs.

Once you are up and running, you will use Papa John’s supply chain for all your materials and recipes. There are fees to pay to Papa John’s and certain restrictions on how you run your business (you will receive a six-to-eight-week training). However, otherwise, it is just like running any other business.

What Is Costs To Open Up a Papa John’s Restaurant?

The requirements for opening a Papa John’s franchise in the U.S. or Canada are typically a minimum net worth of $750,000 and minimum cash (or liquid assets) of $250,000. However, as mentioned, Rob Lynch as Papa John’s CEO has been working to expand the footprint of the business. Thus, they are offering some special requirements for veterans and financing options for the upfront costs.

Depending on your location, the total investment may cost between about $150,000 and $800,000 to open a new location. This is primarily tied to the real estate expenses. Unsurprisingly, premium locations tend to cost more to open any sort of business. There are also equipment costs and a one-time franchise fee of $25,000 (included in the total cost).

After the initial costs, the expenses are reduced significantly. However, you will still owe royalty fees and advertising fees as a percentage of profits.

How Much Money Can a Potential Franchise Make?

According to the Papa John’s franchise disclosure document (a legally required disclosure from all franchisors), the average franchise restaurant earns revenue of $781,202 per year. There is a 5% annual royalty fee and an 8% advertising fee. Plus, you will need to subtract the cost of food, labor and other operating costs.

Typically, each franchise location will earn around $70,000 in after-tax profits, assuming the owner is relatively hands-off. If the owner acts as the manager, that can help save some money. However, many franchisees prefer to work towards opening multiple locations.

Learn More About Franchises Today

Things are looking up for Papa John’s restaurants under the tenure of the current Papa Johns CEO. With a few significant changes to how the franchise model operates, the company has helped to offer even more opportunities. Learn more about franchising Papa John’s today. Perhaps this is the right path for you to gain financial freedom.

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