Risk Score
Pending analysis
Investment Range
$541,818 - $1,038,174
Franchise Fee
$24,000
Total US Locations
176
Business Summary
Donatos Pizza operates restaurants that specialize in fresh, high-quality pizzas, sandwiches, and other foods. These Donatos Pizza Restaurants offer various services including carry-out, pick-up window, curbside delivery, dine-in, and delivery, all under the "Donatos Pizza®" name.
Corporate History
Donatos Pizza was founded in 1963 by James Grote in Columbus, Ohio, when he purchased an existing pizza restaurant. He developed the signature Donatos Pizza system, expanding it to over 100 company and franchise-owned restaurants. The concept was operated by Donatos Pizza Inc., incorporated in 1975. In July 1999, McDonald's Corporation acquired the Donatos Pizza system through its affiliate, Donatos Pizzeria Corporation (DPC). In December 2003, James and Jane Grote reacquired a majority of DPC's stock from McDonald's, and DPC converted into Donatos Pizzeria, LLC, organized in November 2003. Donatos Pizza has been offering franchises since January 2005.
Financial Overview
Investment Range
$541,818 - $1,038,174
Franchise Fee (Low)
$24,000
Franchise Fee (High)
$30,000
Royalty %
4%
Marketing %
1%
Equipment Costs (Low)
$407,818
Equipment Costs (High)
$816,674
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Donatos Pizza is maintaining its financial health, as indicated by its compliance with financial covenants or receipt of waivers for such covenants as of December 30, 2024. The company reported net income of $2,823,966 for 2024 and $4,881,055 for 2023. While cash and cash equivalents decreased slightly in 2024, no substantial doubt about its ability to continue as a going concern was noted by the auditors in their unqualified opinion.
Financing Details
Donatos Pizza does not offer any direct or indirect financing to franchisees, nor does it guarantee any notes, leases, or other obligations. Franchisees are responsible for securing their own financing.
Performance Metrics
Total US Locations
176
Franchised Units
125
Corporate Units
51
Avg Square Footage
2,000
Franchising Since
2005
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
2
Litigation Summary
Donatos Pizza's legal history includes two related lawsuits from 2014. These actions were brought by groups of current and former franchisees against Papa Murphy's International LLC, certain members of its board of managers and executive team, and others. The lawsuits alleged misrepresentations concerning financial performance representations in Papa Murphy's franchise disclosure document and the franchisees' local marketing obligations, among other things, including claims for violation of the Washington Franchise Investment Protection Act, fraud, negligent misrepresentation, and breach of contract. The two actions were consolidated in September 2014 and were dismissed in June 2020 after settlements were reached. These settlements included varying outcomes such as dismissal of claims for no consideration, payments by some plaintiffs to Papa Murphy's, Papa Murphy's covering advertising costs for some groups, returning development fees, extending franchise agreement terms, and purchasing stores from other plaintiff groups.
Bankruptcy History
Donatos Pizza has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their Donatos Pizza franchise for an additional 10-year term, franchisees must provide written notice between 180 and 365 days before the current term ends. They must have complied with all obligations under the Franchise Agreement, including monetary commitments. Additionally, franchisees are required to remodel and upgrade their restaurant to meet the then-current specifications and standards for new Donatos Pizza Restaurants. They must also have consistently operated the restaurant in a manner aligned with Donatos Pizza's mission statement and philosophies. Upon renewal, franchisees and their owners must sign the then-current form of franchise agreement, which may contain materially different terms, and a general release of claims against Donatos Pizza.
Training & Support Program
Franchisor Assistance
Donatos Pizza provides comprehensive assistance to its franchisees both before and during the operation of their restaurants. Before opening, Donatos Pizza helps with site acceptance, approves leases, provides mandatory and suggested specifications and layouts for the restaurant, licenses the TRIO Software, identifies approved products and suppliers, and offers online access to the Operations Manual. Donatos Pizza also advises on the Grand Opening Marketing Program, provides initial training for the franchisee and their operating partner, and sends a training team on-site for "Opening Training" to assist with staff training and the grand opening for the first restaurant. During operation, Donatos Pizza advises on restaurant operations based on reports and inspections, provides special guidance and training upon request (at franchisee's expense), continues access to the online Operations Manual with periodic updates, issues and modifies Operating Standards, and allows the use of its confidential information, Marks, and copyrighted materials. Donatos Pizza also licenses the TRIO Software, offers refresher training courses periodically, maintains and administers the National Marketing Fund, and manages System Websites for advertising and marketing.
Initial Training Hours
274
Training Location
Certified Training Restaurant and Home Office in Columbus, Ohio
Ongoing Support
Donatos Pizza offers ongoing support to franchisees through advice on restaurant operations based on reports and inspections, covering areas such as operating standards, purchasing, and administrative procedures. Franchisees have online access to the Operations Manual, which is periodically updated, and Donatos Pizza issues and modifies Operating Standards as needed. Additional or special guidance, assistance, and training are available upon request, though these may incur fees and expenses. Donatos Pizza also maintains and administers a National Marketing Fund and System Websites to advertise and promote the brand. Franchisees and their managers may be required to attend refresher training courses, periodic conferences, workshops, and programs, for which fees and expenses may apply. Each Donatos Pizza Restaurant must always have at least two fully qualified managers who have completed the training curriculum.
Franchise Requirements
Ideal Candidate Profile
Donatos Pizzeria primarily focuses its development efforts on candidates interested in developing multiple Donatos Pizza Restaurants under a Development Rights Agreement. For business entities, the franchisor requires an approved Operating Partner who either holds at least 5% of the ownership interests or receives a performance-based compensation package (5% or greater of outstanding Ownership Interests). This Operating Partner must dedicate at least 40 hours per week to the operation, promotion, and enhancement of the Donatos Pizza Restaurants and must satisfactorily complete the franchisor's training program.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Full-Time
Territory Type
Limited
Territory Size Requirements
Donatos Pizza defines the franchisee's Area of Primary Delivery Responsibility based on the likely ability to deliver pizzas to all locations within that area by driving no more than 8 minutes from the restaurant. There is no minimum size specified for this area.
Staffing Notes
Donatos Pizza requires each restaurant to have three manager-level staff members, including the Operating Partner, who must complete the initial training program to Donatos Pizza's satisfaction. During all operating hours, at least one manager-level staff member who has completed the required operational management training or is a manager-in-training must be on-site. Specifically, the restaurant must always have a fully qualified general manager and an assistant general manager who have completed Donatos Pizza's training curriculum. If a general manager or assistant general manager leaves, a replacement must be appointed and start training within 90 days. Donatos Pizza's Operating Standards regulate staffing levels, associate qualifications, training standards, dress, and appearance, but franchisees maintain control over their associates' employment terms and conditions.