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Pizza Hut Franchise Cost & Fees

Date of Incorporation: 1958

Franchising Since: 1959

Headquarters: Plano, Texas

 

Business Description: The franchisor, Pizza Hut, Inc. (PHI or Pizza Hut), operates and franchises pizza restaurants. PHI's primary activity is the operation, development, franchising, and servicing of single-purpose Pizza Hut restaurants, which offer various combinations of family dine-in, carryout, and delivery services, primarily serving pizza, pasta, and other Italian-style food items. PHI's corporate parent is YUM! Brands, Inc.

 

Franchise Offer: PHI offers franchises to operate three types of Pizza Hut-branded units at specific locations (collectively Restaurants). The Restaurants are:

A. Red Roof restaurants: Pizza Hut pizza and other products approved by PHI are sold for dine-in and carryout consumption, and may be delivered for off-premises consumption (a Red Roof restaurant that offers delivery is referred to as an RBD).
B. Delivery restaurants: Approved Products are delivered for off-premises consumption.
C. Delivery/Carryout (Delco or Delco-lite) restaurants: Approved Products are sold for carryout and are delivered, all for off-premises consumption.

 

Financial Assistance: YUM Funding Financing Program: YUM! Capital LLC (YUM Capital) is a special purpose limited liability company organized under Delaware law, the sole member of which is YUM Capital Funding Corp. (YUM Funding), a Delaware non-stock corporation. YUM Capital is funded by participating banks and is secured by loans made by YUM Funding to franchisees of YUM's restaurant brands. JPMorgan Chase Bank, N.A. serves as administrator for YUM Capital and YUM Funding and as master servicer of the loan portfolio. YUM also offers an optional lending assistance program for qualified minorities (the YUM Minority Lending Assistance Program). Except as described, the franchisor does not offer, directly or indirectly, any arrangements for financing the initial investment or the continuing operation of the franchise. Neither YUM nor the franchisor guarantees the franchisee’s note, lease or obligation.

 

Training and Assistance: Pizza Hut will offer training through a “blended approach”, utilizing a combination of technology, on the job training and paper-based training materials. The blended learning will follow the standard 4-step training model: (1) Prepare (2) Show/Tell (3) Guided Practice and (4) Follow-Up. Technology will include the Learning Zone, an optional web-based learning system, and the Online Standards Library. Until PHI determines, in its sole discretion, to charge a fee, the Learning Zone will be offered free of charge to franchisees who sign the Pizza Hut Hiring Management System and Learning Management System Services and Support Agreement. Periodically, PHI's Training Department may also develop and present other programs or seminars for supervisory personnel and employees. Attendance at these additional training programs will be optional. PHI may make changes and revisions to the training programs, locations or materials at any time.

 

Territory: PHI will not develop or operate, or allow any other licensee or franchisee to develop or operate, a Restaurant at any point within 500 yards of any of a franchisee’s Restaurant(s). Continuation of these limited territorial rights within a 500 yard radius of any Restaurants does not depend on achieving any particular sales volume, market penetration, or other similar contingency. A Delivery Area will normally encompass a minimum of 5,000 households. All the territorial protections described above are limited. The franchisee will not receive an exclusive territory. The franchisee may face competition from other franchisees, from outlets that PHI owns, or from other channels of distribution or competitive brands that PHI controls.

 

Term of Agreement and Renewal: The term of the franchise is 20 years. There is currently no option to renew.

 

Obligations and Restrictions: PHI recommends, but does not require, that the franchisee, or your principal owners, participate in the day-to-day operation of the Restaurant(s). Each Restaurant must be directly supervised by an on-site manager who has successfully completed PHI's mandatory training program. Neither the franchisee nor any on-site manager can have any interest in or business relationship with any of PHI's competitors. The franchisee and principals must sign a written agreement to maintain the confidentiality of PHI's trade secrets and proprietary information. The franchisee must offer for sale all Approved Products that PHI designates as standard for Restaurants and the franchisee may offer for sale any Approved Product that PHI designates as optional for Restaurants.

 

Estimated Number of Units: 14,970

 

Investment Tables:

Initial Investment:

New Red Roof Dine-in Restaurants

Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Development Services Fee Fee Varies
Development Fees Varies
Equipment $225,000 $450,000
Opening Inventory $4,000 $8,000
Smallwares $25,000 $50,000
Building and Site Improvements $540,000 $1,500,000
Land Varies
Delivery Vehicles Varies
Computers $15,000 $30,000
Additional Funds (3 months) $5,000 $20,000
Miscellaneous $10,000 $22,000
;Start-Up "Other" $3,000 $4,000
Estimated Total (excluding real estate) $852,000 $2,109,000

 

New Freestanding "Delco" Delivery/Carryout Restaurants

Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Development Services Fee Fee Varies
Development Fees Varies
Equipment $125,000 $200,000
Opening Inventory $4,000 $8,000
Smallwares $15,000 $22,000
Building and Site Improvements $325,000 $525,000
Land Varies
Delivery Vehicles Varies
Computers $15,000 $30,000
Additional Funds (3 months) $5,000 $20,000
Miscellaneous $10,000 $22,000
Advertising $18,000 $25,000
;Start-Up "Other" $3,000 $5,000
Estimated Total $545,000 $882,000

 

New Inline/Endcap "Delco" Delivery/Carryout Restaurants

Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Development Services Fee Fee Varies
Development Fees Varies
Equipment $135,000 $175,000
Opening Inventory $4,000 $8,000
Smallwares $12,000 $18,000
Building and Site Improvements $155,000 $200,000
Delivery Vehicles Varies
Computers $15,000 $30,000
Additional Funds (3 months) $10,000 $20,000
Miscellaneous $10,000 $22,000
Advertising $0 $25,000
;Start-Up "Other" $3,000 $5,000
Estimated Total $379,000 $528,000

 

New Inline/Endcap "Delco Lite" Delivery/Carryout Restaurants

Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Development Services Fee Fee Varies
Development Fees Varies
Equipment $100,000 $125,000
Opening Inventory $4,000 $8,000
Smallwares $10,000 $14,000
Building and Site Improvements $125,000 $175,000
Delivery Vehicles Varies
Computers $15,000 $30,000
Additional Funds (3 months) $10,000 $20,000
Miscellaneous $10,000 $22,000
Advertising $0 $20,000
;Start-Up "Other" $3,000 $5,000
Estimated Total $297,000 $434,000

 

Other Fees:

Type of Fee Amount
Monthly Service Fee 6% of Gross Sales (6.5% under certain circumstances).
Taxes As levied by tax authorities.
National Advertising 2.5 to 3% of Gross Sales.
IPHFHA Dues 2-3% of Gross Sales.
Local Advertising The difference between 4.25% of the monthly gross sales and the required national advertising contribution rate.
Cooperative Advertising The difference between 4.25% of the monthly gross sales and the required national advertising contribution rate.
Software Training Fee $1,500 plus travel and living expenses.
Software Maintenance/Support Fee Currently $1,600 per year per unit for all services listed in FDD (PHI may increase this fee as needed).
Training Reasonable publication, preparation and administrative fees (set by PHI).
Additional Materials Reasonable publication, preparation and administrative fees (set by PHI).
Inspection and Testing Costs (if paid by franchisee) $0 to $50,000 depending on the product (costs include salaries of PHI employees, travel costs, and laboratory charges).
Audit Costs of audit. Interest on underpayment, not greater than the legal maximum rate.
Employee Piracy Double the annual compensation of employee involved, plus costs and attorneys’ fees.
Late Charges As set by PHI (currently 1.5% per month), but not greater than maximum legal 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.

The above information has been taken from the FDD of Pizza Hut. Year of FDD: 2014

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