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Pizza Patrón Franchise Cost & Fees

Date Incorporation: 1986

Franchising Since: 2002

Headquarters: Dallas, Texas


Business Description:  Pizza Patron Stores offer pizza in two sizes with a variety of toppings. They also sell soft drinks and other non-alcoholic beverages. Although Stores offer traditional pizza products, they cater primarily to Hispanic customers. All Store service personnel speak Spanish, and Store menus are printed in both Spanish and English. Stores sell their products for customer carry-out and offer catering service for neighborhood celebrations (with prior written approval). They do not offer delivery service.


Franchise Offer: The franchise relates to the operation of quick service food establishments (Stores) that sell pizza and non-alcoholic beverages under the Pizza Patron trade name and business system.


Financial Assistance:  The franchisor does not offer direct or indirect financing. The franchisor will not guarantee the franchisee’s note, lease or other obligation.


Training and Assistance: Initial training incorporates both classroom and on-the-job training. The franchisor may require that all Store employees successfully complete initial and periodic training that the franchisor prescribes. The franchisor may offer periodically additional training programs and classes, attendance at which may be optional or mandatory, at its election, for the franchisee, the General Manager and/or other of the franchisee’s employees. For the franchisee’s first store, the franchisor will send an operations specialist to the Store for at least four days during the period the Store first opens for business to verify that the franchisee is operating the Store in accordance with the Operations Manual.


Territory: The Franchise Agreement provides the franchisee competitive protection in a Trade Area around the Store in which the franchisor will not open or grant a franchise for another Store. Except in high-density population centers, a Store's Trade Area consists of the area inside a circle whose center lies at the Store's front door and whose radius extends precisely two miles from the circle's center. In densely populated cities, the franchisor can specify a Trade Area of less than two miles' radius, so long as the area contains a sufficient population of our target market customers to support a Store (typically 60,000 people).


Term of Agreement and Renewal:  The length of the initial franchise term is 10 years. If the franchisee is in full compliance, he or she can extend the franchise for an additional 10 years.


Obligations and Restrictions: If the franchisee is an individual, the franchisor encourages him or her to manage the Store personally, but does not require that he or she do. If the franchisee chooses not to manage the Store, the franchisee must appoint an individual, called a General Manager, to assume personal responsibility for managing the Store's day-to-day operations. The General Manager must be a full-time employee who either lives in the neighborhood where the Store will be located or agrees to move into the neighborhood and become active in the community. The General Manager must also successfully complete the training program before the Store is opened. The franchisee must offer and sell all products and services that the franchisor requires, and only the products and services that the franchisor has approved for the Restaurant. The franchisor may not offer or sell any products it has not approved.

 

Estimated Number of Units: 100

 

Investment Tables:

Initial Investment

For a Traditional Carry-Out Store

Name of Fee Low High
Initial Development Fee $7,500
Initial Franchise Fee $7,500 $12,500
Security Deposits $1,500 $4,500
Architectural/Engineering Fees $2,500 $4,000
Leasehold Improvements $89,000 $120,000
Furniture, Fixtures, Equipment and Smallwares $63,000 $74,000
Signs $6,000 $12,000
Travel, Lodging and Meals for Initial Training $2,500 $3,500
Operating Permits $500 $1,500
Opening Inventory $4,000 $7,000
Opening Publicity and Promotions $5,000 $7,000
Additional Funds – 3 months $10,000 $20,000
ESTIMATED TOTALS (excluding real estate purchase and lease costs) $199,000 $273,000

For a Free-Standing Store

Name of Fee Low High
Initial Development Fee $7,500
Initial Franchise Fee $7,500 $12,500
Security Deposits $1,500 $4,000
Architectural/Engineering Fees $4,000 $6,000
Leasehold Improvements $200,000 $279,000
Furniture, Fixtures, Equipment and Smallwares $63,000 $74,000
Signs $15,000 $35,000
Travel, Lodging and Meals for Initial Training $2,500 $3,500
Operating Permits $500 $1,500
Opening Inventory $4,000 $7,000
Opening Publicity and Promotions $5,000 $7,000
Additional Funds – 3 months $10,000 $20,000
ESTIMATED TOTALS (excluding real estate purchase and lease costs) $320,000 $457,000

 

Ongoing fees

Type of Fee Amount
Royalties 5% of Gross Sales
Ad Fund Not to exceed 2% of annual Gross Sales
Ad Customization Fee Reasonable charge
Local Advertising Franchisor recommends 4% of Gross Sales; Franchisor can set a minimum of 2% of Gross Sales rate when a local cooperative forms.
Web site/Intranet Fee Not to exceed $50 per month
Initial and Additional Training Reasonable charge
Indemnification Unlimited
Supplier Inspection and Testing Fee Cost of inspection, if applicable, and cost of test
Audit Fees Cost of audit, including travel, meal and lodging expenses of auditor.
Interest/Late Charges The lesser of (i) 2% above the commercial prime rate announced in the Wall Street Journal, or (ii) the highest rate permitted by applicable law.
Charge for Nonpayment Due to "Insufficient Funds" $50 plus reimbursement of costs and expenses from the nonpayment.
Transfer Fees $5,000

Year of FDD: 2011

The above information has been compiled from the FDD and website of Pizza Patron.

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