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Happy's Pizza Franchise Cost & Fees

Date of Incorporation: 1996

Franchising Since: 2007

Headquarters: Farmington Hills, Michigan

 

Business Description: The Happy's Pizza Restaurant franchise is a restaurant business that sells pizza, ribs, chicken, seafood, subs, salads, and other food products to the general public for carry-out, dine-in, catering or delivery. Some franchises may also sell beer and wine if the franchisor authorizes those sales and the franchisee is able to obtain the necessary governmental approvals and licenses. A Happy's Pizza Restaurant may be located in a free standing building, retail shopping center or mall and ranges from 1600 to 5000 square feet in size.

Franchise Offer: The franchisor offers and sells Happy's Pizza Restaurant unit franchises and area development franchises. The franchisor may also offer and sell products and services to its franchisees.

Financial Assistance: The franchisor does not offer direct or indirect financing for unit franchises, nor does the franchisor guaranty any of the franchisee’s notes, leases, or other obligations. The franchisor may, in its sole discretion, offer to finance up to 50% of the initial area development fee for qualified area developers.

Training and Assistance: The franchisor will make available an initial training program to train the franchisee to operate the Restaurant. If the franchisee is not an individual, the franchisor will provide the training to a designated owner or a manager level employee selected by the franchisee and approved by the franchisor that will be involved in the day-to-day operation of the Franchise Business. The franchisor will train up to two persons (designated owners or managers) without charge. The initial training program will consist of up to one-week of classroom training at the franchisor’s offices and up to 120 days of training at a Restaurant or Restaurants in southeast Michigan designated by the franchisor. The franchisor may require that the franchisee’s managers, including replacement managers, satisfactorily complete the training programs and additional training programs. Area developers will attend the training program for unit franchises because area developers must open and operate a unit franchise. However, the area development training program will also include training specific to the area development business.

Territory: Unit franchisees must operate the Restaurant only at a location approved in writing by the franchisor. The franchisee will not be granted a minimum or maximum territory in which to operate the Franchise Business. As long as the franchisee is not in any type of breach or default of your Franchise Agreement, the franchisor will not open or authorize any other person to open a Happy's Pizza restaurant location in the area that is within a two mile driving distance from the Franchise Location (Protected Area). However, if the Franchise Location is in a densely populated area, the Protected Area may be an area that is less than a two mile driving distance and that area will be agreed to in writing before signing the Franchise Agreement. Area developers receive a territory that may be described in terms of advertising market areas, political subdivisions, including cities, townships, counties or states, or by streets and natural borders. The size and definition of the territory will be negotiated based on numerous factors, including population density, the number of unit franchises to be developed and the timetable for development. As long as area developer is not in default of its obligations, the franchisor will not authorize any other person to operate an area development franchise in the territory.

Term of Agreement and Renewal: The length of the initial franchise term is five years. There are two five-year options for renewal if requirements are met.

Obligations and Restrictions: For unit franchises, the franchisee, or if the franchisee is a corporation, partnership, limited liability company or other entity, at least one of the persons designated as the “Designated Owner” must (a) devote his or her full time and effort to the day-to-day active management and operation of the Franchise Business; (b) personally exercise his or her best efforts to market the Franchise Business and maximize customer satisfaction; (c) preserve and exercise ultimate authority and responsibility with respect to the management and operation of the Franchise Business; and (d) represent and act on behalf of the franchisee in all dealings with the franchisor. After the franchisee has operated the Franchise Business for 12 months or more, the average weekly Gross Revenues for each calendar quarter must be equal to at least 75% of the average weekly Gross Revenues for the same calendar quarter for all Restaurants in the Happy's Pizza franchise system that have been in operation for a period of 12 months or more. Area developers must be personally involved in the conduct and operation of the area development franchise. If area developer is not an individual, an individual owning an equity interest in area developer that is designated by the area developer and approved by the franchisor must be personally involved in the operation of the area development franchise. The franchisee must only sell products and services approved and specified by the franchisor.

Estimated Number of Units: 100

Investment Tables:

Initial Investment

For a Unit Franchise

Name of Fee Low High
Initial Franchise Fee $35,000
Grand Opening Advertising $10,000
Initial Lease Payments $3,000 $21,000
Leasehold Improvements $100,000 $210,000
Equipment, Fixtures, and Furniture $130,000 $195,000
Signs, Menu Boards, Neon and Illuminated Picture Boxes $15,000 $50,000
Initial Inventory and Operating Supplies $15,000 $35,000
Miscellaneous Travel and Living Expenses while Training $2,500 $9,000
Insurance $4,000 $9,000
Miscellaneous Pre-opening Expenses $2,000 $9,000
Additional Funds (three months) $20,000 $25,000
ESTIMATED TOTALS $336,500 $608,000

For an Area Development Franchise

Name of Fee Low High
Area Development Fee $100,000 $1,000,000
Insurance $4,000 $9,000
Office and Computer Equipment $0 $10,000
Costs incurred while attending training $2,500 $9,000
Legal, Accounting and Other Miscellaneous Pre-opening Expenses $2,000 $10,000
Initial Investment for a Unit Franchise $336,500 $608,000
Additional Funds - 3 months $5,000 $30,000
ESTIMATED TOTALS $450,000 $1,676,000

 

Ongoing fees

For a Unit Franchise

Type of Fee Amount
Monthly Royalty Fee 4% of Gross Revenues
Local Advertising Fees Amount specified by the franchisor, but not to exceed $1,000 per week without the franchisee's consent.
Advertising Fund Contribution Up to $1% of Gross Revenues
Additional Training Currently $20 per hour plus travel and living expenses
Renewal Fee 20% of the standard initial franchise fee being charged by us at the time of renewal
Transfer Fee 50% of the standard initial franchise fee being charged by us at the time of transfer
Late Charge and Interest Late charge of $250 and interest of 1 5% per month or maximum rate allowed by law
Audit Expenses Cost of audit
Accounting Administration Fee $300 per month
Insurance Actual cost to the franchisor
Operations Manual Replacement Fee $50
Maintenance and Repairs Actual cost to the franchisor
Refurbishing Costs Amount varies
Indemnification Amount will vary under circumstances
Allocation of Expenses Amount will vary under circumstances
Liquidated Damages for Certain Violations $100 to $500 per violation
Liquidated Damages on Termination The present value of the royalty fees that the franchisee would have paid to the franchisor for the lesser of (i) the balance of the term of the Franchise Agreement, or (ii) 36 months.
Costs and Attorneys' Fees Amount will vary under circumstances
Bookkeeping and Bill Paying Services $225 per month

For an Area Development Franchise

Type of Fee Amount
Refund of Fees Applicable amount
Referral Fee Amount specified by the franchisor
Reimbursement for Expenses The amount of our expense plus 25%
Additional Training A per diem amount plus out-of-pocket expenses
Costs of Enforcement of Unit Franchise Agreements A proportionate amount of the actual expenses
Renewal Fee 25% of the area development fee paid by area developer
Transfer Fee 25% of the area development fee paid by area developer
Manual Replacement Fee $150
Indemnification Amount will vary under circumstances
Costs and Attorneys' Fees Amount will vary under circumstances
Liquidated Damages on Termination 50% of the initial area development fee paid by area developer

The above information has been compiled from the FDD of Happy’s Pizza.
Year of FDD: 2012

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