Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Pizza Hut Franchise Costs (2017 FDD)

by Franchise Chatter on December 30, 2014

in Franchise Costs, Pizza Franchises



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Pizza Hut Photo by Tiffany Bailey

This post was updated on April 23, 2017 to reflect information from Pizza Hut’s 2017 FDD (Item 7).

Detailed Estimates of Pizza Hut Franchise Costs Based on Item 7 (Estimated Initial Investment) of Pizza Hut’s 2017 Franchise Disclosure Document

For New “Red Roof” Dine-In Restaurants

  • “Red Roof” System Restaurants include Endcap Dine-In System Restaurants that meet the minimum Brand Standards, as well as freestanding Dine-In System Restaurants.

1.  Initial Franchise Fee:  $25,000

2.  Development Fees:  Varies

  • If you sign one or more Development Agreements for new System Restaurants, not in connection with an acquisition of existing System Restaurants from Pizza Hut, you must pay Pizza Hut a development fee of $25,000 for each System Restaurant.
  • The Development Agreement will specify the date by which the System Restaurant must be open for business. If you open the System Restaurant by the scheduled time, Pizza Hut will apply the development fee to the Initial Franchise Fee for the System Restaurant. If you do not open on time, Pizza Hut will retain the development fee and will be free to develop the area or to franchise it to a third party.
  • The development fee is not generally refundable.

3.  Equipment:  $225,000 to $450,000



  • Subject to credit requirements, some vendors may require payment 30 days after the invoice date.
  • In addition to the estimates disclosed here, you may elect to use the services of the third-party vendor, Revenue Management Solutions. If you do, you will be required to pay Revenue Management Solutions its then-current cost (currently approximately $500 per System Restaurant per year).
  • While your use of the RMS Services is currently optional, Pizza Hut reserves the right to require your use of such RMS Services at any time in the future, in its sole discretion.

4.  Opening Inventory:  $4,000 to $8,000

  • Subject to credit requirements, some vendors may require payment 30 days after the invoice date.

5.  Smallwares:  $25,000 to $50,000

  • Subject to credit requirements, some vendors may require payment 30 days after the invoice date.

6.  Building and Site Improvements:  $565,000 to $1,575,000

  • Land, building, and site improvement costs vary depending upon location and size of the land and building, and on whether the land and building are owned or leased. The typical number of square feet required for a “Red Roof” Dine-In Restaurant is 2,000 to 4,000.

7.  Land:  Varies

8.  Delivery Vehicle:  Varies

  • System Restaurants offering delivery are not required to provide delivery vehicles (they may rely on employee-owned vehicles). If you acquire your own vehicles, costs will vary depending upon the type of vehicle and whether it is owned or leased.

9.  Computers:  $15,000 to $30,000

  • See Item 11 for a complete description of the Computer System and your obligations concerning it.

10.  Additional Funds (3 months):  $5,000 to $21,500

  • This is an estimate of your initial start-up expenses, taking into account that a System Restaurant is essentially a cash business. These funds consist of pre-opening expenses (including training), initial employee wages, insurance premiums, licenses, permit costs, recruitment, and other variable costs (such as initial utility bills, paper products, and cleaning and other supplies).
  • These figures are estimates and Pizza Hut cannot guarantee that you will not have additional expenses starting the business.
  • Your actual costs will depend on many factors, such as:  your management skill, experience, and business acumen; local economic conditions; local market conditions; prevailing wage rates in your community; competition; and the sales level reached in the period covered.

11.  Miscellaneous:  $10,000 to $22,000

  • Miscellaneous costs consist of pre-opening and grand opening expenses, such as training, utility deposits, restaurant set-up, etc.

12.  Start-up “Other”:  $3,000 to $4,000

  • Start-up “Other” costs consist of new unit office supply package, banners, forms, and uniforms.

13.  Total:  $877,000 to $2,185,500



  • On the costs that are not fixed, Pizza Hut does not expect your costs to increase beyond inflation in the relevant industry segment unless the supplier’s costs increase due to shortages, catastrophes, strikes, Acts of God, or other causes beyond the supplier’s control.
  • Pizza Hut relied on its 50-plus years of experience to compile these estimates.
  • As a matter of policy, Pizza Hut does not offer financing directly or indirectly for any part of the initial investment.

For New “DBR/FCD” Dine-In/Delivery/Carryout Restaurants

  • The total estimated initial investment necessary to begin operation of a new “DBR/FCD” dine-in/delivery/carryout Restaurant ranges from $624,000 to $1,710,500.
  • The typical number of square feet required for “DBR/FCD” dine-in/delivery/carryout Restaurants is 1,600 to 2,900.

For New Freestanding Delivery/Carryout (“Delco”) Restaurants

  • The total estimated initial investment necessary to begin operation of a new freestanding delivery/carryout (“Delco”) Restaurant ranges from $560,000 to $908,500.
  • The typical number of square feet required for Delco Restaurants is 1,000 to 1,600.
  • Pizza Hut recommends an 18-week advertising campaign ($18,000 to $25,000) to drive sales for new Delco System Restaurants. The advertising campaign is not required but Pizza Hut believes that it effectively increases sales. This figure excludes national and co-op dues.

For New Inline/Endcap Delivery/Carryout (“Delco”) Restaurants

  • The total estimated initial investment necessary to begin operation of a new inline/endcap delivery/carryout (“Delco”) Restaurant ranges from $302,000 to $539,500.
  • The typical number of square feet required for Delco Restaurants is 1,000 to 1,600.
  • Pizza Hut recommends an 18-week advertising campaign ($0 to $25,000) to drive sales for new Delco System Restaurants. The advertising campaign is not required but Pizza Hut believes that it effectively increases sales. This figure excludes national and co-op dues.


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