Do you want to open a pizza shop business by buying Marco’s Pizza franchise? If YES, here is how much it cost to open a Marco’s Pizza franchise successfully. If you are looking towards opening a Marco’s Pizza Franchise, it will be nice for you to have a of what the company represents before enquiring about the total cost of opening their franchise in your location.
Marco’s Pizza Franchising LLC started operations in 1978 and they began selling franchise in 1979. They have their corporate headquarters at Toledo, Ohio and presently they have an estimated 955 franchise units in operation. The franchisor is Marco’s Franchising, LLC. A Marco’s Pizza store makes and sells various sizes and recipes of pizza for carryout, delivery, in-store dining, and catering.
Stores also sell, to a much lesser extent, secondary products such as beverages, salads, CheezyBread, hot and cold sandwiches, chicken wings, and desserts. Depending on the situation, franchisees may not be required to sell these secondary products.
Stores are required to offer customer pick-up, delivery service, catering and may be authorized to offer fast casual type dine-in services. A Marco’s Pizza store typically occupies 1,200 to 1,600 square feet of commercial space, and seats 12 or fewer people. Here are areas where you are expected to spend money and the cost associated with it;
Financial Requirements to Buy a Marco’s Pizza Franchise
- 1. Initial Franchise Fee – Single Store Franchise Agreement: $0 to $25,000
- 2. Development Fee: $5,000 for each Store that you must develop in your territory
- 3. Site Exploration Deposit Fee: $5,000
- 4. Brand Launch Program: $10,000
- 5. Royalty – Limited Seating and Expanded Seating Stores: 5.5%
- 6. Royalty – Special Venue Stores: standard is 5.5% of Net Royalty Sales
- 7. Royalty – Key Management Employee Program: 2.5% of Net Royalty Sales
- 8. Brand Development Fund: Currently, 1.0% of Net Royalty Sales
1. Initial Franchise Fee – Single Store Franchise Agreement: $0 to $25,000
The Initial Franchise Fee for Limited Seating and Expanded Seating Stores is $25,000, but may be discounted if you qualify for Marco’s Pizza’s Military or Management Employee promotional incentives described below:
Marco’s Pizza currently discounts the Initial Franchise Fee to $20,000 for qualified first responders (firefighters, paramedics, and law enforcement officers) with 5 or more years of service. If the franchisee is a corporation, partnership, limited liability company, or other legal entity, the first responder participant must maintain at least 51% ownership interest in the entity to qualify for this discount.
Marco’s Pizza currently discounts the Initial Franchise Fee to $15,000 for qualified U.S. veterans. Marco’s Pizza currently waives the Initial Franchise Fee for qualified U.S. veterans with a 50% or greater military service-connected disability rating. Marco’s Pizza currently discounts the Initial Franchise Fee for qualified “Key Management Employees.”
Please note that there are three levels of available discounts: Level 1 (Director position or above for at least 1 year or 5 years of employment in all other positions, Initial Franchise Fee is 60% of the standard Initial Franchise Fee); Level 2 (Director position or above for at least 5 years or 10 years of employment in all other positions, Initial Franchise Fee is $10,000); and Level 3 (20 years of employment, any position, Initial Franchise Fee is $5,000).
2. Development Fee: $5,000 for each Store that you must develop in your territory
If you sign a Development Agreement, you will pay Marco’s Pizza a Development Fee to acquire the rights to develop an agreed-upon number of Stores within a specific geographic area (“Development Area”) under that agreement.
This amount will be equal to $5,000 for each Store that you must develop in your territory. Under a Development Agreement, you will be required to establish an agreed-upon number of Stores within the Development Area, at specific locations (to be specified in separate Franchise Agreements).
Please note that Marco’s Pizza will apply a $5,000 credit from the Development Fee that you pay toward the Initial Franchise Fee that is due under the Franchise Agreement for each Store that you commit to develop under the Development Agreement.
3. Site Exploration Deposit Fee: $5,000
Under certain circumstances, if you want more detailed information about site analysis and Store operations prior to signing a Franchise Agreement, Marco’s Pizza may offer you the opportunity to enter into a Site Exploration Deposit Agreement and pay a $5,000 non-refundable deposit (“Site Exploration Deposit”) towards the Initial Franchise Fee.
Within 60 days after signing the Site Exploration Deposit Agreement, you will either sign a Franchise Agreement and pay Marco’s Pizza the remaining balance of the Initial Franchise Fee, or the Site Exploration Deposit Agreement will expire, Marco’s Pizza will retain the Site Exploration Deposit for the services provided under the Agreement, and no further action will be taken toward signing a Franchise Agreement.
4. Brand Launch Program: $10,000
Marco’s Pizza and you will work together to conduct a Brand Launch Program for your Store, which will cost $10,000.
5. Royalty – Limited Seating and Expanded Seating Stores: 5.5%
(subject to adjustment up to a maximum of 6.0%) of Net Royalty Sales. Due Date: Paid by electronic payment (ACH debit). ACH based on Weekly Net Royalty Sales is processed each Monday, 8 days after the end of each week.
6. Royalty – Special Venue Stores: standard is 5.5% of Net Royalty Sales
But may be reduced by agreement based on the Special Venue facility characteristics and event criteria. Due Date: Paid by electronic payment (ACH debit). ACH based on Weekly Net Royalty Sales is processed each Monday, 8 days after the end of each week.
7. Royalty – Key Management Employee Program: 2.5% of Net Royalty Sales
(if commission is due to an Area Representative, this will increase by an additional 2.2%). Due Date: Paid by electronic payment (ACH debit). ACH based on Weekly Net Royalty Sales is processed each Monday, 8 days after the end of each week.
8. Brand Development Fund: Currently, 1.0% of Net Royalty Sales
(Marco’s Pizza has the right to increase this fee by 0.5% by giving you 90 days’ prior written notice). Depending on the venue, Special Venue Stores may not be required to participate in the Brand Development Fund.
Due Date: Same as Royalty Fee.
Brand development fun is used to fund creative development of advertising materials, public relations agency fees, communications and public relations, development/maintenance of web pages, franchise conferences, product testing, administrative expenses, and other programs that support the growth of the Marco’s Brand.
- Geography Based Advertising Funds (includes National Advertising Fund and Regional Advertising Funds): The amount of contribution required to Marco’s Pizza’s National Advertising Fund is 4% of Net Royalty Sales. The amount of contribution required to a Regional Advertising Fund depends on the geographic region in which the Store is located. Your total combined contribution to a National Advertising Fund and Regional Advertising Fund will not exceed a total of 5.5% of Net Royalty Sales combined for all levels of the Geography Based Advertising Funds.
Due Date: Same as Royalty Fee.
- Market Advertising Cooperative: The amount set and spend determined by co-op member votes
Due Date: Same as Royalty Fee.
Marco’s Pizza franchisees may form an advertising cooperative, which will establish its own local advertising fees to combine the resources of several Stores and manage advertising media purchases.
Please note that Marco’s Pizza allows credit for your Marketing Advertising Cooperative expenditure for a minimum of 3% against this Geography Based contribution.
- Local Store Marketing: Minimum of 0.5% of Net Royalty Sales, but not more than 7% minus the percentage contributed to the Brand Development Fund and Geography Based Advertising Funds
Due Date: Same as Royalty Fee. (Paid to various vendors other than Marco’s Pizza.)
Please note that the amount paid to an Ad Co-op may be credited toward your Local Store Marketing requirement.
- Additional Training: $1,000 per person
Due Date: 2 weeks before beginning of training.
Please note that the Initial Franchise Fee includes initial training for one person (Designated Franchise Operator); for others, you must pay an additional fee.
- Replacement Designated Franchise Operator Training: $5,000 per person
Due Date: Upon beginning of training.
Please note that if Marco’s Pizza trains a replacement for you or the Designated Franchise Operator, the replacement must be enrolled in the initial training program within 30 days after the end of the former person’s full time employment, and timely completion of the initial training program in proper sequence within 8 weeks thereafter.
- Additional Assistance: $300 per day (Due Date: 30 days after billing.)
- Performance Deficiencies Service Fee: $500 per continued failure to comply with operational standards or policies (Due Date: 15 days after billing.)
Please note that this payable if you fail to adequately achieve a performance measurement on a Store Visitation Report and fail to rectify the item before the next Store Visitation, but not less than 30 days.
- Financial Reporting Fee: $100 per violation if financial reports are not submitted (Due Date: 30 days after due date.)
Please note that this is payable if you fail to submit financial reports each Accounting Period.
- Relocation: $8,250 or 1/3 of the then-current Initial Franchise Fee (Due Date: Upon demand.)
Please note that this is payable when Marco’s Pizza has approved the site to which the Store will be relocated.
- Transfer: $2,500 to $8,250, or 1/3 of the then-current Initial Franchise Fee plus 3% of gross selling price if buyer is acquired through Marco’s Pizza’s lead generation system or existing franchisee. (Due Date: Before the transfer takes place.)
Please note that this is payable when you sell your franchise. No charge if franchise transferred to a corporation, partnership, or limited liability company which you control.
- Audit: cost of audit, plus prime, plus 4% interest on underpayment (Due Date: 15 days after billing.)
Please note that this is payable only if audit shows an understatement of at least 2% of Net Royalty Sales for any Accounting Period.
- Renewal Fee – Limited Seating and Expanded Seating Stores: $6,250, or 25% of the then-current Initial Franchise Fee, whichever is greater. (Due Date: 30 days before renewal.)
- Renewal Fee – Special Venue Store: 25% of the then-current Initial Franchise Fee, but may be reduced by agreement based on the various Special Venue facilities, characteristics, and event criteria. (Due Date: 30 days before renewal.)
- Insurance: Varies
Due Date: As incurred.
Please note that if you fail to obtain the required insurance coverage(s), Marco’s Pizza may obtain this insurance for you and you must reimburse it within 5 days for all costs it incurs in doing so.
- Interest and Additional Expense Fees: 1.5% per month interest on all late payments, plus a 5% Additional Expense Fee. (Due Date: As accrued.)
Please note that these fees apply to late payments owed to Marco’s Pizza or its affiliates. The Additional Expense Fee applies to amounts due that are not paid within 10 business days of the due date.
- Termination Fee: Average Royalty Fees due for the 24 full Accounting Periods immediately preceding the time you ceased operation times the lesser of: (a) 36; and (b) the number of Accounting Periods remaining in the Term of the Franchise Agreement. (Due Date: Upon franchisee termination.)
Marco’s Pizza will not enforce the requirement to pay a termination fee if you and it mutually agree to close the Store, sell the equipment, sign a termination agreement, and if a pizza store no longer operates at the location.
Please note that you may terminate the Franchise Agreement at any time after finishing the initial training program by giving Marco’s Pizza written notice at least 120 days before termination and paying it the Termination Fee at least 30 days before termination.
- Web-Based Training (Marco’s University): Payment included as part of the Technology Fee. (Due Date: Weekly – Same as Royalty Fee.)
Please note that the Funds ongoing support, future enhancements of the training portal, and reimbursement to Marco’s Pizza of costs advanced on your behalf.
- Technology Fee: $110.54 per Accounting Period by ACH (Due Date: $27.64 Weekly – Same as Royalty Fee.)
Please note that multiple technology systems to provide support for customer relationship management system, email advertising customers, online training, and tools to measure customer satisfaction.
- Costs and Attorneys’ Fees: This fee will vary under circumstances. (Due Date: Upon demand.)
Please note that if you default under the Franchise Agreement, you must reimburse Marco’s Pizza for its expenses (including reasonable attorneys’ fees) in enforcing or terminating the Agreement, if it prevails in the proceeding.
- Audit Costs: All costs and expenses associated with the audit, reasonable accounting and legal costs, and interest on the underpayment. (Due Date: Upon demand.)
Please note that this is payable only if Marco’s Pizza audits because you did not submit sales statements or keep books and records, or if you underreport your sales by 2% or more, or intentionally underreport.
- Indemnification: This cost will vary under circumstances. (Due Date: As incurred.)
- Securities Offering Fee: $2,500 or Marco’s Pizza’s actual expenses, whichever is greater (Due Date: Upon demand.)
Please note that if you choose to engage in a securities offering, you must reimburse Marco’s Pizza for its reasonable costs and expenses (including legal and accounting fees) to evaluate your proposed offering and you also must indemnify Marco’s Pizza.
- Development Agreement Continuation Fee: 75% of the weekly average system-wide sales, multiplied by 5.5% (Due Date: Weekly.)
Please note that if you do not meet your Development Schedule obligations under the Development Agreement, you may extend the relevant time period for up to 13 Accounting Periods by paying a Continuation Fee.
- MUO & Inventory Tablet: $235.50 (Due Date: As incurred.)
- Email Upgrade Fee: $10 per account per month.
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