Risk Score
Pending analysis
Investment Range
$367,428 - $733,124
Franchise Fee
$15,000
Min Cash Required
$10,000
Total US Locations
1,044
Business Summary
Papa Murphy's International LLC operates retail food outlets specializing in "take and bake" pizza, salads, desserts, and other related products. The business model allows customers to customize their fresh pizza with high-quality ingredients, take it home, and bake it in their own ovens for a convenient, home-cooked meal. Papa Murphy's stores focus on freshness, quality, and convenience, featuring daily-made fresh dough, 100% whole-milk mozzarella grated daily, and hand-sliced fresh vegetables. Unlike traditional pizzerias, Papa Murphy's locations do not have pizza ovens, venting hoods, or dining areas, and do not require delivery drivers or wait staff, aiming to solve the "dinnertime dilemma" for its guests.
Corporate History
Papa Murphy's International LLC was incorporated in June 2004 and converted to a Delaware limited liability company in May 2010. However, the company's take-and-bake pizza franchise system has a longer history through its predecessors: Papa Aldo's International, Inc., which began offering franchises in 1982, and Comurphyco Franchise Corporation, which offered franchises starting in 1986. These entities eventually merged into Papa Murphy's International, Inc., and the current company has been franchising under the Papa Murphy's brand name since 1995. Papa Murphy's is a wholly-owned subsidiary of MTY Food Group Inc., a publicly-traded Canadian corporation that operates and franchises a diverse portfolio of over 50 restaurant concepts.
Financial Overview
Investment Range
$367,428 - $733,124
Franchise Fee (Low)
$15,000
Franchise Fee (High)
$25,000
Minimum Cash Required
$10,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$298,114
Equipment Costs (High)
$580,000
Working Capital
$30,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The financial statements for Papa Murphy's International LLC are consolidated with its parent company, MTY Franchising USA, Inc., which serves as the guarantor. MTY Franchising USA, Inc. has received an Unqualified opinion from its auditors, indicating that its financial statements present fairly its financial position and cash flows. However, a special risk note highlights that the guarantor's liabilities can exceed its tangible assets, which may entail additional risk of financial loss for Papa Murphy's.
Financing Details
Papa Murphy's International LLC does not offer direct or indirect financing to its franchisees. This means that Papa Murphy's does not assist with providing loans, payment plans, or guarantees for any financial obligations franchisees might incur when setting up or operating their franchise. While Papa Murphy's may leverage its creditworthiness with vendors to help franchisees get better payment terms, this is not considered direct financing.
Performance Metrics
Total US Locations
1,044
Franchised Units
1,001
Corporate Units
43
Avg Square Footage
1,400
Franchising Since
1995
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
Yes
Litigation Count
10
Litigation Summary
Papa Murphy's International LLC has disclosed a history of litigation, though none are recent (within the last three years of the FDD issuance date). The company was involved in two consolidated lawsuits with groups of current and former franchisees, filed in 2014, alleging misrepresentations regarding financial performance, local marketing obligations, and other claims. These cases were settled and dismissed in June 2020 through various agreements, including direct payments, advertising cost coverage, and store buyouts by Papa Murphy's. Another case from 2015, involving a franchisee's defaults and tortious interference claims, was also settled and dismissed when Papa Murphy's purchased the franchisee's stores. Additionally, MTY USA, Papa Murphy's parent company, and its affiliates were involved in several public agency actions between 1992 and 2012. These included allegations of violations of franchise registration and disclosure laws in Maryland, Virginia, and New York, often pertaining to disclosure omissions or unregistered offerings. Other cases involved a trademark distribution agreement and registration issues for brands like Extreme Pita, Blimpie, Maui Wowi, and SweetFrog. All of these public agency actions and affiliate litigations have been resolved or settled.
Bankruptcy History
Papa Murphy's International LLC discloses that its Co-Chief Operating Officer, Adam Lehr, filed for personal Chapter 13 bankruptcy in the U.S. Bankruptcy Court for the District of Minnesota on January 30, 2018. This bankruptcy proceeding was successfully discharged on June 29, 2021. Papa Murphy's International LLC itself has no other bankruptcy history required to be disclosed.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Papa Murphy's franchisees must provide written notice at least six months before their initial agreement expires. They are required to have faithfully performed all obligations under their initial agreement, and to refurbish, remodel, or replace their franchise location and obsolete equipment to meet current brand standards. Franchisees must also sign a general release, sign a new franchise agreement (which may have materially different terms), pay a renewal fee, ensure they have an acceptable location and lease, and attend any mandatory training that Papa Murphy's requires.
Training & Support Program
Franchisor Assistance
Papa Murphy's provides franchisees with comprehensive assistance both before and after opening their store. Before opening, Papa Murphy's helps with market analysis and site selection, including reviewing proposed locations and lease agreements, and guiding the design and construction of the store according to brand standards. Franchisees receive mandatory initial training that covers food preparation, management duties, marketing, and the point-of-sale system. This training is held at designated Papa Murphy's training stores or virtually. After opening, Papa Murphy's offers continuous support through ongoing training, marketing strategies, and sales assistance. The company administers marketing programs, conducting national, regional, and local promotions across various media. Franchisees are provided with advertising guidelines and materials, and Papa Murphy's manages the Brand Marketing Fund. Franchisees may also attend refresher courses and annual Franchise Conventions. Papa Murphy's accesses the franchisee's business and computer systems to ensure compliance, periodically inspects supplier facilities, and provides updates to the Operations Manual, new product bulletins, and sales techniques. Additionally, franchisees utilize the PMI Enterprise Solution (a computer and point-of-sale system) and receive help desk support from the Store Solutions team. A Franchise Advisory Board is also used to gather franchisee input on key business initiatives.
Initial Training Hours
265
Training Location
Designated Papa Murphy's training store and virtually
Ongoing Support
After a Papa Murphy's franchisee opens their store, Papa Murphy's provides continuous support. This includes ongoing assistance for training, marketing strategies, sales, and the use of the Operations Manual. Papa Murphy's administers marketing programs, conducting national, regional, and local promotions across various media channels. Franchisees also receive periodic refresher training, seminars, and are encouraged to attend Franchise Conventions. Papa Murphy's ensures compliance by accessing business and computer systems and regularly inspects supplier facilities. They provide updates to the Operations Manual, new product bulletins, and sales techniques. Franchisees are required to use the PMI Enterprise Solution, which is a computer and point-of-sale system, and receive help desk support from the Store Solutions team. Additionally, Papa Murphy's utilizes a Franchise Advisory Board for franchisee input on key business initiatives.
Franchise Requirements
Ideal Candidate Profile
Papa Murphy's International LLC seeks individuals who will personally oversee and manage the day-to-day operation of their franchised store. For those owning multiple stores, active participation in the management and operation of each location is required, either by the franchisee themselves or a designated operating partner. The company also offers a "Store Manager to Ownership Transfer Program" for Papa Murphy's store managers with a minimum of 24 months of experience, suggesting a preference for candidates with operational and managerial experience within the Papa Murphy's system.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
hands-on
Territory Type
Non-Exclusive
Territory Size Requirements
Papa Murphy's franchisees will be given a specific location within which they will operate their store, but they will not receive an exclusive territory or any protected area. The specific address for the franchise premises or the general site selection area will be identified in Attachment A of the Franchise Agreement. While Papa Murphy's International LLC considers market analysis, market penetration plans, population demographics, traffic, parking, and other businesses in the area when approving a site, there are no specific measurable territory size requirements, such as a defined radius, population minimum, or fixed geographic boundaries, detailed in the FDD. Franchisees are also generally restricted from marketing outside their designated regional advertising or local cooperative area without prior written consent.
Staffing Notes
Papa Murphy's International LLC requires all stores to be managed by a trained owner or a Certified Manager. A Certified Manager is an employee who has completed specific in-store training according to the Papa Murphy's One Bite at a Time training program or at a Certified Training Store. The training curriculum covers team member positions and duties, including product flow, specifications, dough preparation, guest service, cashier operations, telephones, ordering, and speed of service. Franchisees are solely responsible for hiring, firing, training, setting hours for, and supervising all their employees.