Q&A from the crust up
What are the minimum requirements to qualify to be a Pizza Hut franchisee?
- $700,000 Net Worth
- $350,000 Liquid Assets
- Strong Credit Report and History
- Endorsed financial plan for future development
A qualified candidate will have successful retail or restaurant business ownership experience or management experience in the restaurant industry.
Passion for Operations:
A Pizza Hut franchisee must be fully “hands-on” with the business, be customer focused with strict attention to detail and have the ability to build a team of people and grow their capabilities.
How much will I pay in royalties and advertising? What fees will I pay when I become a Pizza Hut franchisee?
- Initial Franchise Fee = $25,000
- Monthly Service Fee (Royalties) = 6% of Gross Sales
- National Advertising = 4.25% Gross Sales
The above amounts do not include the initial investment required to construct the restaurant, grand opening expenses or opening inventory. Please refer to the 2016 Pizza Hut, LLC Franchise Disclosure Document (FDD), Item 7, for more in-depth information on the estimated initial investment and FDD Item 6 for other ongoing fees.
How much money will I make? What will be my profit percentage? What are the profit margins of other franchisees? What kind of return on my investment may I expect?
Pizza Hut provides some key financial performance representations in Item 19 of the FDD. Prospective franchisees are encouraged to conduct their own independent investigation to determine potential sales and profit levels prior to signing any binding agreement. Existing franchisees are also a resource you can use for more information. A list of domestic franchise restaurants, the franchisee’s name, and the restaurant phone number are listed in Item 20 of the FDD.
How long is the approval process?
Initial qualification involves a series of background checks and interviews and generally takes 10-12 weeks. After that, identifying and securing an opportunity can take 3 to 9 months depending on size and scope of the opportunity.
Once approved, how long will I have to build my restaurant?
Generally, once your trade area has been approved and you have signed your Development Agreement, you have one year to open for business.
Who will build my restaurant?
You will be responsible for the construction of your restaurant. However, Pizza Hut has a wealth of resources to assist you, including the names of general contractors that work across the United States with significant experience building Pizza Hut restaurants. A new franchisee may, for a fee, secure Pizza Hut’s services to complete its construction process.
Will you provide plans and an equipment list? Can I use equipment that I already own or used equipment?
The Pizza Hut Architecture and Engineering team will provide you with standard building plans that you and your contractor (if applicable) can use as well as work with you on any changes to the layout because of city restrictions. You will not be allowed to use equipment or furnishing you already own. You will work with Restaurant Supply Chain Solutions (RSCS) on standards and specifications regarding furnishings, equipment and approved suppliers.
Does Pizza Hut plan to sell any company-operated restaurants in my area? Can I get a list of all the restaurants available for sale?
Pizza Hut may sell existing company owned restaurants to existing or new franchisees. Given that these restaurants are operating today, we do not issue a summary list of what is available. If you are qualified as a franchise candidate and have indicated that you would like to buy restaurants in a specific geographic area, we will determine if we have restaurants for sale that meet your request.
How much will food and supplies cost? What suppliers should I use?
A list of approved suppliers will be provided to you and you are required to purchase your supplies from those companies. Pizza Hut provides some key cost information in Items 8 and 19 of the FDD. Purchasing activities for food, packaging and equipment used in the Pizza Hut system are conducted primarily through RSCS.
Can I use my own recipes and menu ideas?
Franchisees may sell only approved products in their restaurants.
What type of marketing materials and support will I receive?
Pizza Hut is continually working to develop new innovative products and to improve existing products. Franchisees receive a calendar of upcoming events from the Pizza Hut marketing department, as well as order forms for POP and other advertising materials for specific promotions.
What kind of training does Pizza Hut offer?
Before you open your restaurant, you and/or your key operator are required to attend and complete the Pizza Hut operations training program. The training program ranges from 8 – 12 weeks and is conducted in a certified training restaurant in Dallas, TX. Pizza Hut pays for the cost of the training. Franchisees are responsible for all other costs including travel and lodging of the management team. Please refer to Item 11 of the FDD for specific information.
Do you have a quality assurance program? Who enforces quality?
Pizza Hut has a two-tier quality assurance program. The first is a customer based shopper program where restaurants receive customer feedback on their restaurant experience. Secondly, Pizza Hut conducts periodic standards reviews in-restaurant and gives feedback to the operators regarding execution excellence. Franchisees must meet specific operating standards as part of their franchise agreement.
Will I be required to use specific computer software at my restaurant?
The FDD describes the type of computer system and software you must use. You must also prepare and submit detailed financial records as required by the Franchise Agreement.
Does Pizza Hut provide restaurant financing?
Pizza Hut does not provide financing, however, a list of banks/financing institutions that have expressed an interest in lending to Pizza Hut franchisees is provided, upon request. To facilitate financing, Pizza Hut is listed on the SBA registry.
Is Pizza Hut listed in the Small Business Administration (SBA) Registry?
Yes, the franchise registry (www.franchiseregistry.com) is a national online listing of approved franchise systems whose franchisees will receive accelerated loan processing through the U.S. Small Business Administration (SBA). Through this process, small business owners are provided with higher levels of service and quicker loans. Franchise systems not listed on the site are not eligible for expedited loan processing through the SBA.
Does Yum! Brands offer a minority lending assistance program?
YUM offers an optional lending assistance program for qualified minorities (the “YUM Minority Lending Assistance Program”). The term “minorities” is defined by the United States Small Business Administration for its business development programs at 15 U.S.C. Section 631(f)(1)(C) and it includes African Americans, Hispanic Americans, Native Americans, Indian tribes, Asian Pacific Americans and other minorities.
If you are a qualified minority, you may apply to YUM for lending assistance for your franchised business under the YUM Minority Lending Assistance Program. YUM is not obligated to provide lending assistance to your franchised business and it may deny your application for any reason. If you meet YUM’s criteria for the YUM Minority Lending Assistance Program and YUM agrees to allow you to participate, then YUM’s lending assistance will take the form of YUM guaranteeing 25% of the principal of your franchised business loan up to a maximum of $3,000,000 per loan or franchisee.
More detailed information on the YUM Minority Lending Assistance Program including; individual applicant requirements, initial capital requirements, operational requirements and terms of the loan can be found in Item 10 of the 2016 Pizza Hut, LLC Franchise Disclosure Document.