Because Papa John’s is trying to recruit franchisees for new restaurant growth, it is offering enormous discounts to potential U.S. operators. Based on the information in the article, Papa John’s says the incentive package is worth roughly $60,000.
1. What are the fees that Papa John’s is temporarily waiving?
2. Using the minimum investment amounts in place before this discount period, what percentage are Papa John’s franchise fees of McDonalds? What percentage are Papa John’s franchise fees of Taco Bell?
3. What are the two typical monthly fees that a franchisee must pay and what are these based upon?
4. What journal entries do you think a franchisee would make for Papa John’s franchise fees, assuming $300,000 net sales at a startup restaurant?
5. How does Papa John’s determine that the net sales figure is correct?
Peterson, H. (2015). Here’s how much it costs to open a Papa John’s restaurant. Business Insider, Dec. 19 (Retrievable online at http://www.businessinsider.com/how-much-it-costs-to-open-a-papa-johns-2015-12)