Following its success in the U.S.,
Papa John's International Inc.
) has put forward a package of incentives for its Canadian
franchisees to shore up its Canadian franchisee business.
The initiative is a part of the company's 'Canadian Development
Incentive Program', which exempts potential franchisees from
opening fees (standard fee is $25,000). A reduced royalty payment
for up to 30 months is also included in the program.
Franchisees signing new Canadian unit development agreements
through Aug 30, 2013, for new restaurant openings on or before
Dec 29, 2013, will be eligible for this program.
The latest scheme basically evolved from the company's 'Domestic
Franchise Development Incentives' that were introduced in 2009 to
increase unit openings. According to management, the program has
garnered huge acceptance so far and boosted its unit openings
considerably since 2009.
Papa John's, the world's third largest pizza company, believes
that these support programs help gain market share as well as
reduce potential unit closures amid a tough economic condition.
This Louisville, KY-based company also uses several other options
in the U.S. such as Franchisee Loans, Franchise Insurance
Program, Franchise Training and Support.
There is also a 'Franchise Support Initiative' in place that
includes food cost relief by lowering the commissary margin on
certain commodities sold to franchisees, targeted royalty relief,
local marketing support and more.
Presently, most of the companies are transforming to a more
franchise-centric model to reduce the volatility in earnings and
increase cash flow generation. As of Sep 23, 2012, Papa John's
had 4,029 restaurants in 50 states across 34 countries. In the
next six years, the company expects to open approximately 1,500
restaurants, including 300 in North America and 1,200 in the
We remain encouraged by the company's long and successful track
record, continued uptrend in earnings, upbeat guidance, viable
business strategy and strong balance sheet. In fact, this latest
strategy of freebies-to-franchisee will help it to strengthen its
franchisee network and perform better going forward.
Papa John's currently carries a Zacks Rank #3 (Hold). However,
some restaurant companies which are expected to perform well
Krispy Kreme Doughnuts Inc.
) carrying a Zacks Rank #1 (Strong Buy) and
AFC Enterprises Inc.
The Cheesecake Factory Inc.
) both carrying a Zacks Rank #2 (Buy).
AFC ENTERPRISES (AFCE): Free Stock Analysis
CHEESECAKE FACT (CAKE): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
PAPA JOHNS INTL (PZZA): Free Stock Analysis
To read this article on Zacks.com click here.