Risk Score
Pending analysis
Investment Range
$323,000 - $740,000
Total US Locations
111
Business Summary
Pizza Factory offers a fast casual pizza and pasta restaurant that provides sit-down, take-out, and delivery services. Pizza Factory restaurants come in three formats: dine-in/party size, dine-in, and take-away and delivery. These restaurants serve a variety of food and beverages including pizza, pasta, sandwiches, soft drinks, wine, and beer. Some smaller express locations may have limited or no seating and might not offer alcohol.
Corporate History
Pizza Factory, Inc. was incorporated in California on June 3, 1982. The company's principal officers and shareholders have been involved in operating pizza and pasta restaurants since 1990. Pizza Factory began offering franchises for its restaurant concept in 1985 and currently focuses on selling and supporting these franchises, in addition to operating one company-owned Pizza Factory restaurant in Show Low, Arizona. It is also affiliated with PF Burlington, LLC, which runs a Pizza Factory location in Burlington, Washington.
Financial Overview
Investment Range
$323,000 - $740,000
Franchise Fee (High)
$30,000
Royalty %
5%
Marketing %
3%
Equipment Costs (Low)
$147,000
Equipment Costs (High)
$205,000
Working Capital
$47,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Pizza Factory's financial statements show generally increasing revenues from 2021 to 2023, with net income fluctuating but remaining positive. However, the company's cash balance, total current assets, and overall working capital have decreased over this period, partly due to significant and increasing distributions to shareholders. The auditors issued an unqualified opinion, indicating the financial statements are presented fairly, and there is no explicit mention of a going concern qualification, although the auditor notes the management's responsibility to evaluate this. Pizza Factory also has uninsured bank balances, which is common for businesses with substantial cash. Overall, while profitable and growing in revenue, Pizza Factory's cash and working capital position has weakened, influenced by the substantial distributions to its shareholders.
Financing Details
Pizza Factory does not offer any direct or indirect financing to its franchisees. This means that franchisees will need to secure all necessary funding for their Pizza Factory restaurant through third-party lenders. Pizza Factory and its affiliates will not guarantee any loans, leases, or other financial obligations for franchisees, nor do they receive any payment for helping franchisees arrange financing with outside lenders. However, Pizza Factory does require franchisees to grant it a security interest in all equipment and fixtures for the Pizza Factory restaurant to secure the franchisee's obligations under the Franchise Agreement. This security interest must be first in priority unless the franchisee has given a security interest to another lender specifically for the purpose of establishing the Pizza Factory restaurant or purchasing equipment, in which case Pizza Factory will accept a second-priority security interest.
Performance Metrics
Total US Locations
111
Franchised Units
110
Corporate Units
1
Avg Square Footage
3,000
Franchising Since
1985
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
1
Litigation Summary
Pizza Factory had one lawsuit to report. Pizza Factory filed a lawsuit on July 29, 2019, against Willow Glen Pizza Factory, Inc., its predecessor, and a guarantor for breach of contract. On October 17, 2019, Willow Glen filed a countersuit against Pizza Factory and its shareholders, Mary Jane Riva and Robert Riva. Willow Glen alleged that Pizza Factory had promised to help the business succeed, including conducting a professional study for store location, and claimed breach of contract, negligent misrepresentation, fraud, and breach of good faith. The parties settled this dispute in February 2021. As part of the settlement, Pizza Factory agreed to pay Kirk up to $65,000, and Willow Glen transferred certain assets to Pizza Factory. No other litigation is required to be disclosed.
Bankruptcy History
Pizza Factory has no bankruptcy history to disclose.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Pizza Factory franchisees must meet several conditions. They need to pay a successor agreement fee, which is currently $5,000. Franchisees must have consistently complied with all their obligations under the current Franchise Agreement, including not having committed three or more material defaults within any 36-month period during the term. They must also provide written notice of their intent to renew between 9 and 12 months before the agreement expires. Before the new term begins, franchisees are required to undertake and complete remodeling, renovation, and refurbishment of their Pizza Factory Restaurant to meet current standards, unless they have already done so within the preceding five years. Additionally, franchisees and their employees must comply with Pizza Factory's then-current qualification, training, and certification requirements at their own expense. Finally, they must sign a general release of any claims against Pizza Factory and its affiliates and execute a new franchise agreement, which may have materially different terms and conditions from their original contract.
Training & Support Program
Franchisor Assistance
Pizza Factory provides comprehensive support to its franchisees both before and after they open their restaurants. Before opening, Pizza Factory assists with reviewing and accepting proposed restaurant sites, and provides franchisees with basic specifications for design, layout, and a list of approved suppliers for equipment and fixtures. Franchisees must use Pizza Factory-approved architects, engineers, and general contractors, whose drawings and plans are reviewed and accepted by Pizza Factory. An initial training program is provided for up to two people, including the Operating Principal and general manager. Franchisees also receive access to Pizza Factory's confidential Operations Brand Standards Manual. During operation, Pizza Factory offers up to seven days of on-site training around the time of opening. They also provide ongoing advisory services on various operational aspects like food preparation, supply management, service styles, and employee training. Pizza Factory conducts and modifies operating standards and manages the Advertising Fund for national, regional, and local marketing campaigns. Franchisees receive guidance on authorized products and services, and their local advertising materials must be approved by Pizza Factory. Pizza Factory may also require franchisees and their personnel to attend additional training courses, programs, and conventions, some of which may incur extra fees.
Initial Training Hours
250
Training Location
Pizza Factory corporate office in Oakhurst, California; Pizza Factory restaurants in Fresno, California, Placerville, California, and/or Gilroy, California; and/or Pizza Factory vendor, Saladino's, in Fresno, California.
Ongoing Support
After a Pizza Factory restaurant opens, Pizza Factory provides ongoing support through several channels. This includes optional and mandatory training courses, programs, and conventions, though some may require additional fees. Pizza Factory offers advisory services on various operational aspects, such as food preparation, supply management, service styles, and employee training. Franchisees can also request additional assistance and advice from franchise business consultants, which may involve on-site visits, and for which franchisees must reimburse expenses and pay training charges. Pizza Factory continually issues and modifies operational standards and provides access to its Manuals. The franchisor also maintains and administers an Advertising Fund, designates authorized products, and approves franchisees' local advertising materials. Additional or refresher training is sometimes offered at company-wide or regional conferences, with no extra cost beyond conference attendance.
Franchise Requirements
Ideal Candidate Profile
Pizza Factory is looking for individuals or entities who can ensure their restaurant is managed by an on-premises manager who dedicates at least 40 hours per week to the business. While Pizza Factory does not require the franchisee themselves to personally supervise, it is recommended that individual franchisees or one of the principals of an entity franchisee serve as the on-premises manager. If a non-owner/non-principal manager is designated, they must satisfactorily complete Pizza Factory's full initial training program. Pizza Factory seeks operators who will diligently ensure their restaurant complies with all brand standards and operational procedures, reflecting a preference for strong, compliant management.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Protected
Territory Size Requirements
Pizza Factory franchisees are granted a "Protected Area" which is defined as the geographic area within a three-mile straight-line radius of the approved restaurant premises. Within this protected radius, Pizza Factory and its affiliates will not operate or grant licenses to other parties to operate traditional Pizza Factory restaurants. However, the franchisor reserves the right to deliver or solicit customers within this area and to operate other types of businesses or Pizza Factory restaurants in "Non-Traditional Venues" (such as food trucks, ghost kitchens, or institutional venues) even within the franchisee's protected area.
Staffing Notes
Each Pizza Factory restaurant must have a designated on-premises manager who works an average of at least 40 hours per week. While the franchisee is not required to personally fill this role, it is recommended for individual owners or principals of entity franchisees. If a non-owner is the manager, they must successfully complete Pizza Factory's initial training program. Pizza Factory franchisees are responsible for hiring and maintaining an adequate, fully trained staff to operate the business in compliance with brand standards. The operations manual outlines recommended positions and responsibilities, including Manager Shift Lead, Pizza Maker, Sandwich Deli, Cashier/Counter, Prep Cook, Cut Table, Delivery Driver, and Dishwasher. Pizza Factory may require additional mandatory training for staff if it deems it necessary.