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How Much Does It Cost to Open Papa Murphy’s Franchise?

Do you want to start a Pizza business by buying Papa Murphy’s franchise? If YES, here is how much it cost to open a Papa Murphy’s franchise plus requirement. Papa Murphy’s was established after two different take-and-bake pizza chains, Papa Aldo’s Pizza and Murphy’s Pizza, were acquired and consolidated by Terry Collins in 1995. Since then, Papa Murphy’s has grown across the United States, Canada, and the Middle East.

Papa Murphy’s agreed to merge with MTY Food Group of Canada. MTY Food Group – which owns Extreme Pita, Jugo Juice, Koya, and TacoTime – would acquire all of the issued and outstanding shares of common stock of Papa Murphy’s for a cash consideration of $6.45 per share, representing a total transaction value of approximately $190 million.

The terms and conditions of the merger agreement were unanimously approved by the boards of directors of both companies. The transaction was subject to customary closing conditions including receipt of applicable regulatory approvals.

Financial Requirements and How Much It Cost

Below are the detailed estimates of acquiring a Papa Murphy’s Franchise, based on Papa Murphy’s 2019 Franchise Disclosure Document

  1. Franchise Fee: $25,000

You’re expected to pay Papa Murphy a non-refundable Franchise Fee of $25,000 when you sign the Franchise Agreement for the purchase of your Franchised Store.

2. Lease and Utilities Deposits and Payments: $2,500 to $6,000

3. Leasehold Improvements: $68,675 to $170,765

  • Note that this figure does not include any tenant improvement allowance received from your landlord or any free-standing buildings or exterior renovations.
  • The average cost per square foot for leasehold improvements for the CREATE Store format was $88 per square foot.
  • Payments for the Leasehold Improvements are made to suppliers, not Papa Murphy. The time and method of payment is determined by the contract between you and the supplier.

4. Signs: $5,000 to $10,000

5. Stamped Architectural Drawings: $6,300 to $7,800

  • The low end of the cost range for stamped architectural drawings assumes a standard set of construction plans for a single tenant improvement in a typical multi-tenant strip center. The high end of the cost range includes set fees for services that may be required by a jurisdiction.
  • Note that the range does not include variable fees for additional services that are not included in the standard construction document package.

6. As Built Survey: $2,000 to $3,700

The typical cost for an as-built survey is $2,000 and covers spaces up to 1,500 square feet. The high end of the cost range reflects potential survey cost that includes set fees for add-ons that may be required by the local jurisdiction, plus additional square footage-based costs for a space at the top range of square footage indicated in Note 11 below.

7. Opening Package (including Equipment and Supplies), Decor, Cabinets, Point-of-Sale System, and Small wares: $116,150 to $175,950

  • You’re expected to purchase an opening supply package from approved vendors, if Papa Murphy so specifies. The opening package shall include all equipment and supplies necessary to commence business at the Franchised Store. If Papa Murphy requires you to enter into a Development Billing Agreement with it, you will reimburse it for amounts it pays third-party vendors for the opening package.
  • You are expected to have access to a facsimile machine, telephone, point-of-sale computer system and email access, business-class broadband internet connection (DSL, cable, or wireless), and reliable transportation.
  • These costs reflect the cost of building Papa Murphy’s latest store format called the “CREATE Store.” The numbers are based on the actual costs incurred in building approximately 10 CREATE Stores across various geographies.
  • This store format has optional upgrades available. The low range costs reflect few or no upgrades, as well as the highest condition of the space and the lowest cost geography.
  • When estimating the cost of building your Franchised Store, the number of upgrades, space condition, and geography should be considered.

8. Miscellaneous Development Service Fees: $0 to $1,270

9. Inventory: $5,000 to $7,000

Inventory is needed as outlined in the Operations Manual. Payments for the Inventory are made to suppliers, not Papa Murphy. The time and method of payment is determined by the contract between you and the supplier.

10. Initial Marketing Fees and Expenses – 6 Months: $30,000

11. Franchise Premises Rent – 3 Months: $3,000 to $10,219

  • You are solely responsible to obtain and pay for a location for the franchise (“Franchise Premises”). The cost of purchasing or leasing Franchise Premises varies with its location and size.
  • The average size of Franchise Premises built in 2018 was 1,322 square feet and ranges from 925 to 1,617 square feet. The average cost for rent for Franchise Premises opened in 2018, including operating costs, was $27,527 per year and ranges from $12,000 to $40,875 per year.
  • The range for Franchise Premises rent identified in this chart reflects Papa Murphy’s best estimate of the total rent you will pay for the first three months for your Franchised Store.

12. Materials and Supplies: $500 to $2,000

13. Operations Training and Foundations Class: $0 to $500

  • Training may take up to five and one-half weeks. Papa Murphy may lengthen, shorten, or restructure the contents of this program at any time.
  • Operations Training and Foundations Class will be provided at no cost to up to two individuals that have signed the Franchise Agreement. The cost of Operations Training and Foundations Class is $500 for each franchisee beyond two or each non-owner attendee.

14. Enterprise Solution Training: $400

  • Enterprise Solution Training is conducted by Papa Murphy’s Enterprise Solution partner, NCR Corporation. The cost of Enterprise Solution Training is currently $400 per entity for up to two participants. Additional participants may attend at a cost of currently $400 for up to two participants.

15. Travel and Living Expenses While Training (In-Store Training, Operations Training, Foundations Class, and Enterprise Solutions Training): $3,395 to $12,150

  • If you are not located near a designated Papa Murphy’s training store (“Training Store”) or an NCR certified training site, travel, accommodations, meals, and other expenses may apply to all of the training period. These amounts are estimates and can vary widely.

16. Employee Training: $500 to $1,500

17. Insurance – 3 Months: $375 to $1,175

18. Bookkeeping/Payroll Service – 3 Months: $1,500 to $1,600

  • Papa Murphy mandates you to retain a bookkeeping and payroll service that meets its criteria for the first year of operation of the Franchised Store.
  • Papa Murphy reserves the right to require you to retain and use a human resources outsourcing firm to provide general human resource support, including but not limited to job description services, human resource compliance support services, management and supervisor training, and payroll services beyond your first year of operation of the Franchise Store.

19. Additional Funds, Working Capital, and Miscellaneous Expenses – 3 Months: $10,000 to $50,000

  • Note that you will also have other miscellaneous expenses involved in establishing a business. These expenses vary greatly, and Papa Murphy has estimated a minimum of $10,000 and up to $50,000.
  • They may include attorney’s fees, license fees, deposits, sales tax bonds (where required), recruiting expenses, employee wages, and supply expenses.
  • You will pay your own legal and other expenses in connection with the review and negotiation of your lease.
  • You’re expected to pay all taxes required by local, state, or federal laws related to the services furnished or used in connection with the operation of a Papa Murphy’s Franchised Store.
  • You’re expected to obtain all permits, certificates, or licenses necessary for the full and proper conduct of the Franchised Store.
  • Papa Murphy also recommends that you have direct access to a minimum of $10,000 for working capital during the first three months of operation.
  • This row estimates your initial three-month start-up expenses, less any revenue earned by you. This row does not include any salary or reimbursement of personal expenses paid to you.

20. Total Estimated Initial Investment: $280,295 to $517,029

  • These figures represent Papa Murphy’s estimates based upon actual expenses in 2018 and Papa Murphy’s experience and the experience of its franchisees.

How to Apply and Get a Papa Murphy’s Franchise

Not much is known about the process of acquiring a Papa Murphy’s franchise. So, if you’re looking to acquire this franchise, you will have to visit the company’s official website, fill and submit the interest form. All other details will be forwarded to you if the company deems you fit and qualified.

Papa Murphy’s offer services to clients who want to eat something fresh when they get home and therefore the pizza and pasta are freshly prepared every day in Papa Murphy’s franchised stores and are sold to customers, hence the“take‘N’bake” that comes with the name.

With this franchise, you gain a lucrative food outlet at the retail level, sell take-and-bake pizza, pasta, fresh calzones, desserts, salads and other products. Regarding financial assistance, the franchisor doesn’t provide or arrange for direct or indirect financing. The franchisor does not also guarantee any financial obligations or notes in the setting up and running of Papa Murphy franchise.

Papa Murphy’s provide a familiarization program as well as training that stretches four stages. The training series includes the selling of aids, specialized consultations in addition to teaching materials that comprises of handouts, videos, presentations, manuals and necessary tests.

This training also covers the preparation and presentation of products, information about the recipes, guidelines for employees, overall operations of the business, customer interactions, sales practices, management of franchise systems, financial and bookkeeping management.

It also covers control of inventory and acquisition, security practices, how to handle equipment, marketing (which includes advertising, promotion, selling, publicizing, presentation, etc.), how to increase sales at the location and assistance in creating excellent rapport with clients.

Papa Murphy’s also has the option of offering other forms of aid, supervision, and services before the franchised stores start operation. It could be in the form of literature, advert materials, flyers, displays, etc. This is not, however, a requirement that is covered by the Franchise Agreement.

Meanwhile, the terms of the agreement and disclosure document, as well as renewal, are ten years. If the franchised store did not default in any way and can meet the necessary conditions, an extension period or renewal for an extra five years is granted.

The operations personnel or franchisee will see to the day-to-day running of Papa Murphy franchised store personally, except otherwise indicated in writing by Papa Murphy. Managers that are employed to oversee such daily activities must undergo the compulsory training course.

  • Conclusion

As Papa Murphy’s charts a return to profitable and sustainable growth, it’s not sitting back. Reports have shown that the initiatives taking place at the pizza chain are extensive, and they’re providing some top-line improvements.

Papa Murphy’s now focuses on seamless digital ordering and the ability to quickly reorder with saved payment information. All these are also integrated into Papa Murphy’s POS system, which has helped the chain minimize operational impact.