Year Business Began: 1958
Franchising Since: 1959
Headquarters: Plano, Texas
Estimated Number of Units: 19,035
Franchise Description: The franchisor is Pizza Hut, LLC (PHLLC). PHLLC’s corporate parent is YUM! Brands, Inc. The franchise is for a business that operates Pizza Hut restaurants offering primarily pizza, pasta and other Italian-style food items and WingStreet chicken products and side dishes. The franchisor currently offers franchises to operate three types of Pizza Hut-branded units at specific locations:
- Restaurant-Based Delivery (RBD) System Restaurants, from which “Pizza Hut” pizza and other products approved by PHLLC are sold for dine-in and carryout consumption and may be delivered for off-premises consumption;
- Delivery/Carryout (Delco) System Restaurants, from which approved products are sold for carryout and are delivered, all for off-premises consumption; and
- Delivery Based Restaurant (DBR)/Fast Casual Delco (FCD) System Restaurants, from which approved products are sold for dine-in and carryout consumption, and are delivered for off-premises consumption.
Training Overview: The franchisor conducts the initial training program at its headquarters and at a system restaurant in Plano, Texas. Successful completion of the initial training program is mandatory for all of the franchisee’s qualified operators. Currently, the initial training program includes “First Slice,” which requires at least the following for qualified operators (as well as all other personnel the franchisor may require): (i) attendance at all one-on-one meetings with designated Pizza Hut functional leaders (franchisee onboarding); (ii) in-restaurant training (including all required web-based training through its Learning Zone) at a time the franchisor designates (restaurant training); (iii) attendance at all pizza prep classes at or near corporate headquarters; and (iv) satisfaction of all portions of the First Slice onboarding checklist. The length of the First Slice portion of the initial training program will vary from 8 to 12 weeks at the franchisor’s discretion depending on franchisees’ experience and/or the experience of their qualified operators. The First Slice portion of the initial training program should be scheduled to finish three to four weeks prior to the opening of the system restaurant. Franchisees may request on-site training or assistance at any time in accordance with guidelines the franchisor may specify in the brand standards or otherwise. The franchisor may from time to time develop additional training programs which the qualified operators and the system restaurant manager(s) must attend and successfully complete. In addition, the franchisor may from time to time conduct conferences, conventions or training session programs.
Territory Granted: The franchisor will grant franchisees a protected radius consisting of 500 yards surrounding each of their system restaurant (protected radius). Subject to the franchisee’s compliance with all brand standards, their fulfilling delivery orders to national, regional and institutional accounts and their providing adequate delivery service throughout their delivery area(s), the franchisor will not develop or operate, or allow any other franchisee or licensee to develop or operate, at the location or within the protected radius, a system restaurant that is the same as the type of system restaurant concept that the franchisee operates at the location. In addition, the franchisor will grant franchisees a specified delivery area for each system restaurant they operate, within which they may deliver the approved products.
Obligations and Restrictions: The franchisor recommends that franchisees, or their principal owners, participate in the day-to-day operation of the system restaurant(s) but it is not a requirement. Each system restaurant must be directly supervised by an on-site manager who has successfully completed the franchisor’s mandatory training program. Franchisees must also designate, and at all times maintain, one or more qualified operators (as the franchisor may require according to the size and scope of their restaurant) to actively manage and participate in the day-to-day operation and ownership of their franchised business. Each of the qualified operators must be approved by PHLLC, and such approval shall not be unreasonably withheld. Franchisees must sell only and all approved products that the franchisor designates as standard for the type of system restaurant franchisees operate unless it otherwise agrees in writing.
Term of Agreement and Renewal: The length of the initial franchise term is typically 10 years. Franchisees can enter into two consecutive Renewal Franchise Agreements for a term of five years each if they meet certain requirements.
Financial Assistance: Except as described below, the franchisor does not offer, directly or indirectly, any arrangements for financing a franchisee’s initial investment or the continuing operation of their restaurants. Even if franchisees meet all of the requirements set forth for the programs, the franchisor may decide to not permit them to participate in either lending assistance program. YUM has entered into an arrangement with a third-party, LS BDC Adviser, LLC, an affiliate of Lafayette Square Holding Company, LLC (lender), pursuant to which lender (through one or more of its managed or advised funds) may provide financing to qualified franchisee applicants, including low-to moderate income individuals in underserved American communities. The franchisor offers an optional lending assistance program for qualified former employees of PHLLC and its predecessor and/or affiliates. If franchisees satisfy the participation criteria and the franchisor agrees to allow them to participate, then the lending assistance will take the form of guaranteeing 25% of their loan principal under this program, for a maximum guaranteed amount of $1,250,000 per loan or franchisee. The Pizza Hut Employee Lending Assistance Program can be discontinued at any time.
Estimated Initial Investment
| Name of Fee | Low | High |
| Initial Franchise Fee | $25,000 | $25,000 |
| Equipment | $100,000 | $300,000 |
| Opening Inventory | $4,000 | $8,000 |
| Smallwares | $10,000 | $50,000 |
| Building and Site Improvements | $240,000 | $1,575,000 |
| Leasehold Interest/ Land | Varies | |
| Computer System | $15,000 | $30,000 |
| Computer System Training | $0 | $1,500 |
| Additional Funds (3 months) | $5,000 | $21,500 |
| Miscellaneous | $10,000 | $22,000 |
| Advertising | $0 | $16,500 |
| Start-up “Other” | $3,000 | $4,000 |
| ESTIMATED TOTAL* | $412,000 | $2,053,500 |
*The estimated initial investment range covers multiple variations of new “traditional” restaurant types. Please see FDD for more details. There is a separate FDD for “express” restaurant types as well.
Other Fees
| Type of Fee | Amount |
| Monthly Service Fee | 6% of gross sales (6.5% under certain circumstances). |
| Taxes | As levied by tax authorities. |
| System Advertising Fund Contribution | 4.75% of gross sales. |
| International Pizza Hut Franchise Holders Association (IPHFHA) Dues | 4.75% of gross sales (set by franchisees), credited to required system advertising fund. |
| Digital Innovation Fee | Currently, $0.41 per transaction conducted through a digital or other automated channel established by the franchisor. |
| Restaurant Technology Fee (currently, a “SUS Fee”) | Currently, $2,800 per year. |
| Help Desk High-Use Fee | Currently, $12 per phone call and $7 for all other events (i.e., chats, emails, etc.) beyond 52 events per year. |
| Software Training Fee | $1,500 plus travel and living expenses. |
| Initial Training Costs | All living and transportation expenses of all trainees. The amounts are unknown and may vary depending upon factors such as the third-party supplier selected and the franchisee’s distance from training. Additional and subsequent trainee charge: $500 per person per week. |
| On-Site Training and Assistance | The then-current training fees plus expenses. |
| On-Going Training | The then-current training fees plus expenses. |
| Proprietary Products | Franchisees must buy proprietary products from the franchisor (or RSCS, if it offers and sells same), its affiliate or designee. |
| Inspection and Testing Costs | Franchisees must reimburse the franchisor for all costs and expenses incurred in connection with the review, inspection and/or approval of a proposed product or supplier, including any salary, travel and lodging expenses. |
| Audit | The amount of the audit expenses is unknown and may vary depending upon factors such as the auditor selected. |
| Late Charges | Currently 1.5% per month. |
| Unauthorized Closure | An amount equal to 24 times the average monthly service fees paid or due with respect to the closed system restaurant during the prior calendar year. |
| Relocation | Varies, depending on the franchisor’s costs in connection with reviewing and/or approving the request. |
| Transfer Fee | $2,500 plus an additional $250 per system restaurant transferred. |
| Management Fee on Death or Disability | Greater of (a) two times the salary paid to individual(s) PHLLC assigns to operate the restaurant, or (b) 10% of the restaurant’s monthly gross sales; plus the franchisor’s reasonable travel, lodging, and meal expenses. |
| Advances | Varies. |
| Indemnification of PHLLC | Varies. |
| Attorneys’ and Experts’ Fees, Court Costs | The amount of these fees and costs are unknown and may vary depending upon factors such as the attorneys and experts selected and the court costs. |
| Third Party Corporate Restaurants Reward Program | Dinova is a third-party restaurants reward program where a royalty of 9.5% is charged on Dinova orders greater than $20 before tax. Dinova orders less than $20 will not incur royalty. Franchisees may opt of this program out via e-mail provided in enrollment materials. |
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