Papa John’s Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)
1. Initial Franchise Fee: $25,000
2. Real Estate Brokerage Fees: $0 to $10,000
- These fees represent commissions payable to real estate brokers in connection with securing possession of a site for the restaurant, whether by lease or purchase.
3. Professional Fees: $500 to $12,000
- These represent fees payable to professional advisors (attorneys and accountants) in connection with evaluation of the franchise, real estate, and other contracts, as well as any other matters.
4. Construction/Leasehold Improvements: $50,000 to $400,000
- These amounts apply to a restaurant located in leased space in a shopping center or strip center. The square footage of a restaurant is estimated to be 1,200 to 1,600 square feet.
- Papa John’s estimates leasehold improvements for an in-line restaurant range from $40,000 to $200,000. If the restaurant will be located in an existing free-standing location, Papa John’s estimates these costs can go as high as $300,000. If you elect to construct a new building for the restaurant, Papa John’s estimates the cost could be up to $500,000.
- If you take over an existing restaurant space, with some of the necessary leasehold improvements already in place, your costs may be closer to the lower end of the range.
- These costs include charges for architects or engineers, which can range from $250 to $30,000.
- The estimate includes permit and impact fees, which vary widely depending on the geographic area, but range from $1,000 to $20,000 or more.
- Labor costs incurred in construction or remodeling may also vary significantly depending on the availability of labor, prevailing labor rates for skilled and unskilled labor, and other factors which may vary from market to market.
5. Furniture, Fixtures, and Equipment: $68,000 to $120,000
- This item includes a make-line, sinks, walk-in coolers, counters, ovens, hood and exhaust system, prep tables, shelving, smallwares, a phone system and answering machine, a desk, filing cabinets, Papa Card processing equipment, and related office supplies.
- The low end of the range assumes that you take over an existing restaurant space with some of these items already in place. The high end of the range assumes that all new equipment is purchased, including two ovens.
- An equipment package for a 1,400 square foot restaurant averages $95,000.
6. Information System: $20,000 to $30,000
- Papa John’s will require you to purchase, lease, or obtain the Information System. Papa John’s is currently the only approved supplier.
- The table includes the estimated cost of purchasing and licensing all aspects of the Information System as currently configured.
- You may contract with a certified third party or make other suitable arrangements for installation and/or support services. However, you will be required to pay your third-party vendor to provide these services and Papa John’s does not establish the fees charged by such third-party providers.
7. On-Site Support Fee: $2,500
- This fee is paid to Papa John’s for in-store support on the Information System.
8. On-Site Installation Fee: $2,000 to $5,000
9. Help Desk Service Fee: $210
- You have the option of subscribing to Papa John’s Help Desk Services for a flat fee of $70 per month or paying on a fee-for-service basis. The fee-for-service rate is currently $80 per hour with a 1/2 hour minimum charge. These rates are subject to change.
10. Technology Maintenance Fee: $720
11. Signage: $3,000 to $20,000
12. First Month’s Rent: $1,200 to $5,000
- The amount of the first month’s rent and security deposit will depend on the area of the country in which the restaurant is located, the size, condition and location of the premises, the availability and demand for the premises among prospective lessees.
- If a building is purchased or constructed rather than leased, you will incur additional capital or financing costs, or both, the extent of which cannot be estimated and will be determined by market conditions and other factors.
13. Security Deposit and Other Deposits, Insurance Premium: $500 to $8,500
- In addition to the security deposit, this amount also covers utility and other deposits and your initial insurance premium.
14. Opening Inventory and Supplies: $3,000 to $10,000
- The difference between the low and high ranges is attributable to the actual size of the restaurant and the amount of the food products, materials, and supplies that you order. Papa John’s will offer guidance and suggestions as to the proper amounts.
15. Opening Advertising: $3,000 to $10,000
- The amount at the lower end of the range is for advertising that you conduct in connection with the opening of your first restaurant and does not include any contributions to the Marketing Fund or to a Cooperative.
16. Training Expenses: $1,000 to $15,000
- The estimated range includes expenses for transportation to the certified training restaurant or Papa John’s University located in Papa John’s corporate headquarters in Louisville, Kentucky, lodging, and meals for one person based on a seven week training period. Papa John’s may require the training period to extend for more than seven weeks depending on the level of retail pizza and/or restaurant experience of the trainee.
- Papa John’s also requires training on the Information System.
- Training is required for your Principal Operator, supervisors, and restaurant managers before your first restaurant is opened. However, the costs will vary depending on the actual number of trainees, the distance to be traveled, the means of transportation used, the choice or availability of lodging, and the experience of the trainees.
- Training materials will average $100 to $250 per trainee.
17. Miscellaneous Opening Costs: $2,500 to $20,000
- This item covers miscellaneous opening costs and expenses, such as installation of telephones, business licenses, and recruiting and opening team training costs.
18. Additional Funds – 3 Months: $15,000 to $50,000
- This item estimates your initial start-up expenses for a three-month period and assumes you pay the maximum estimated figure for monthly rent. These expenses include payroll costs for one restaurant manager and other restaurant employees, but do not include any draw or salary for you. This item does not include royalty or advertising payments, which will be based on your revenue.
19. Total Estimated Initial Investment (Pre-Opening and First 3 Months of Operation): $198,130 to $743,930
- The franchisor relied on over 30 years of business experience from its predecessors and affiliates to compile these estimates, and on information that it has obtained from its current franchisees.
- Total Estimated Initial Investment (Pre-Opening and First 3 Months of Operation): $34,500 to $389,220