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Papa John’s: The franchise opportunity

The leading pizza chain shares its franchise story, the skills it looks for in a 'perfect' franchisee and its "exciting" incentive schemes for 2014...

Franchise: Papa John’s
Description: One of the largest pizza companies in the world
Started in: Founded in the USA in 1984
Founder: John Schnatter
No. of franchises: More than 250 franchises across the UK, and more than 4,400 outlets in 34 countries
Coverage: Global
Average cost per franchise: Between £177,000 and £225,000 (excluding VAT and freehold), of which £70,000 should be in liquid funds
Website: http://www.papajohns.co.uk/franchise/

Papa John’s regards its founder, John Schnatter, as an inspiration to any franchisee. After graduating from Ball State University in 1983, Schnatter returned to Jeffersonville where his father owned a tavern, Mick’s Lounge, which was $64,000 in debt. Schnatter’s father asked him to put his newly acquired business degree to work and help pull the tavern out of debt. Schnatter decreased the debt by increasing the price of the pool tables and lowering the price of beer and once Mick’s Lounge was on its way to showing a profit, Schnatter began to focus again on his first true love, pizza.

Schnatter decided he might be able to get Micks Lounge’s customers to buy the pizza so he knocked out a broom closet in the back of the tavern, sold his 1972 Z28 Camaro and bought $1600 worth of used restaurant equipment. The customers loved the pizza so much that Schnatter was able to expand by moving into adjoining space in 1984, eventually leading to the opening of the first Papa John’s restaurant in 1985.

Now with thousands of franchises operating across the world, Papa John’s discusses its UK-wide franchise opportunities with Startups…

Moving into franchising

So how did Papa John’s move into franchising?

Schnatter knew that there was something missing from national pizza chains: a superior-quality, traditional pizza delivered to the customer’s door. Schnatter’s dream was to one day open a pizza restaurant that would fill that void. Schnatter was so focused on this dream that he asked a college friend to create a logo, bringing “Papa John’s” to life.

Where did the business open its first franchises?

The opening of the first Papa John’s restaurant was in 1984, and this year we are celebrating our 30th anniversary. Our first British restaurant opened in 1999.

How successful were those original franchisees?

The popularity of Papa John’s has grown rapidly.

The franchise opportunity

What makes the franchise different / unique?

Papa John’s uses only the highest quality ingredients and 100% fresh dough to create a top quality pizza with a better natural flavour.

What services do you offer?

Pizza takeaway and delivery.

How big is the market opportunity?

Today, the pizza industry is worth around £2bn in the UK.

How many franchisees do you have today?

In the UK, we have 100 franchisees and growing!

How is the brand marketed?

Papa John’s has a dedicated marketing team which works to support its franchisees. Specialist promotions are regularly being developed, the company undertakes radio and TV advertising campaigns and sponsorships such as recently becoming the official pizza partner of the Football League. In addition, Papa John’s runs specific reward schemes to keep customers coming back for more.

How do you divide the regions?

Each Papa John’s location is carefully selected for its suitability based on a number of criteria. We are always happy to discuss if a particular area or store is suitable.

The perfect franchisee

What do you look for in potential franchisees?

To become a successful Papa John’s franchisee you need to be motivated, enthusiastic, hard-working and want to be part of a growing team. Exceptional interpersonal and people skills are essential, as you’ll be dealing with customers as well as leading your team on a daily basis. In addition to excellent written and spoken communication skills, you’ll have to be an organiser with a can-do attitude – someone who gets things done.

You’ll have to be dedicated and passionate enough to adapt to a proven way of working. And you’ll need the ability to roll your sleeves up and get stuck in, which means everything from making pizza through to managing staff.

So do franchisees work from an office, or are they home-based? Is it part-time or full-time?

Franchisees are full-time and oversee the running of their own Papa John’s store.

How are franchisees vetted?

A selective recruitment process, including meetings, an in-store experience and operational and board approval interviews. We are looking for long term business partners.

What do you offer franchisees that sign-up?

To help prospective franchisees bring our superior quality pizza to even more UK customers we are currently running some exciting incentive schemes for 2014.

For new stores opening in Wales, the Midlands, North East, North West and Scotland, we are offering a 12 month royalty break if opened by July 2014 or a nine month royalty break for stores opening before the end of 2014.

To get new franchisees off to a great start we are also supplying free oven and refrigerated equipment, plus an additional £10,000 of marketing spend for the store opening launch.

The whole package could result in savings of £50,000 for your first Papa John’s store! These fantastic deals are only available for 2014 and are limited, so first come first served.

How much do franchisees pay and what are the ongoing franchise fees?

The initial franchise fee is £18,500+ VAT (at 20%) for each franchise unit; this gives you the right to use the Papa John’s trademarks, its systems for preparing, marketing and selling food products, its information, specifications, know-how and other confidential and proprietary information.

In addition, there is a franchise royalty fee of 5% of the net sales and a marketing fee of 4% (unless there is a local group of stores known as a Co-op who pay an extra 1% of net sales). You will also be responsible for the rent, rates and utility costs of the store for the term of the franchise agreement.

Success and growth

How successful are some of the franchisees today?

Many of our franchisees have enjoyed success and go on to open more Papa John’s stores. One of our most successful franchisees owns 14 Papa John’s!

How is the brand looking to grow?

Papa John’s  has opportunities for potential franchisees throughout the UK including with key locations in the South East, Yorkshire, Manchester, West Midlands, East Midlands, South West, North East, Wales & Scotland.

What is the potential of the business?

Papa John’s has 250 stores in the UK and many of our operators run multi-site businesses and earn a comfortable living from those stores. Individual earnings are dependent on many factors such as overheads and operating costs of the individual stores.

What will the challenges be in achieving that?

Like starting any new business there is a learning curve. Comprehensive training is provided and Papa John’s head office staff are always on hand to help and ensure franchisees get off to a good start.

What awards has the business won?

Papa John’s was named UK ‘Pizza Delivery Operator of the Year’ five out of the last seven years by the Pizza, Pasta and Italian Food Association.

To what extent are the founders involved today?

John Schnatter, founder and CEO of Papa John’s, is still in-charge of the day to day running of Papa John’s.

Finally, is the company a British Franchise Association (BFA) member?

Yes.

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