Pizza Hut
Date of Incorporation: 1958
Franchising Since: 1959
Headquarters: Texas
Country: U.S.
Description: The franchisee will operate a dine-in, delivery, or delivery and carry-out restaurant, offering primarily pizza, pasta and other Italian-style food items, under the name Pizza Hut.
Franchise Offer: Pizza Hut offers franchises to operate three types of Pizza Hut-branded units at specific locations:
i). Red-Roof restaurants – Pizza and other products are sold for dine-in and carryout consumption, and may be delivered for off-premises consumption
ii). Delivery restaurants – Approved products are delivered for off-premises consumption
iii). Deliver/Carryout (or “Delco”) restaurants – Approved products are sold for carryout and are delivered all for off-premises consumption
Financial Assistance: The franchisor does not offer, directly or indirectly, any arrangements for financing the initial investment or the continuing operation of the franchise. The franchisor does not guarantee the franchisee’s note, lease or obligation.
Training and Assistance: All unit managers of the franchised restaurant must complete mandatory training. All training is done at the restaurant on the job. The manager must commence such training within 90 days after the manager is hired or placed in the position. The franchise’s current mandatory training for restaurant managers includes approximately 82 hours of ‘on the job’ training. The franchisor will provide the franchisee with one set of all training materials for each of the franchised restaurants.
Territory: The franchisor grants the right to an exclusive territory. No other Pizza Hut franchisees will develop or operate a restaurant within 500 yards of any of the franchisee’s restaurants. Furthermore, the franchisor will not allow any other Pizza Hunt franchisees to offer delivery service to any point in the franchisee’s designated delivery area. The franchisee will not otherwise receive any exclusive territory or have the right to exclude development of concepts owned by or licensed by the franchisor. Pizza Hut affiliate restaurants may be located within 500 yards of the franchisee’s restaurant or within their delivery area.
Term of Agreement and Renewal: The term of the franchise is 20 years, with no option to renew.
Obligations and Restrictions: It is recommended, but not required, for the franchisee to participate in the day-to-day operation of the franchise restaurant. Each restaurant must be directly supervised by a manager on-site who has successfully completed the mandatory training program. Neither the franchisee nor the on-site manager can have any interest in or business relationship with any competitors. The on-site manager must sign a written agreement to maintain the confidentiality of the franchise trade secrets and proprietary information.
Total Number of Units: More than 13,200 units.
Investment Tables:
Initial Investment:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $25,000 | $25,000 |
| Development Services Fee | Varies | |
| Development Fees | Varies | |
| Equipment | $60,000 | $450,000 |
| Opening Inventory | $4,000 | $8,000 |
| Smallwares | $20,000 | $45,000 |
| Land, Building, and Improvements | $330,000 | $2,325,000 |
| Computers | $21,000 | $70,000 |
| Additional Funds (3 months) | $5,000 | $20,000 |
| Miscellaneous | $10,000 | $22,000 |
| Start-up "Other” | $3,000 | $4,000 |
| Total | $478,000 | $2,969,000 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Monthly service fee | 6.5% of gross sales |
| Taxes | As levied by tax authorities |
| National advertising | 2.5% - 3% of gross sales |
| IPHFHA Dues | 2% - 3% of gross sales |
| Local advertising | The difference between 4.5% of monthly gross sales and the required National Advertising contribution rate |
| Cooperative Advertising | The difference between 4.5% of monthly gross sales and the required National Advertising contribution rate |
| Software training fee | $1,500 plus travel and living expenses |
| Software maintenance/ support fee | $1,600 per year per unit for all services |
| Training | Reasonable publication, preparation and administration fees |
| Additional materials | Reasonable publication, preparation and administration fees |
| Audit | Costs of Audit |
| Compliance Costs | As needed |
| Employee Piracy | Double the annual compensation of employee involved, plus costs and attorney fees |
| Late charges | As set by franchisor (currently 1.5% per month) but not in excess of maximum lawful rate |
| Unauthorized Closure | Double the past year’s monthly service fee |
| Relocation | Maximum $25,000 |
| Transfer fee | $2,500 plus an additional $250 per unit transferred |
Date of FDD: 2009
The above information has been taken from the UFOC/FDD of Pizza Hut.
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