The Hard to Get Papa Johns' Franchise on Global Expansion

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Following a successful period of significant growth during the pandemic, Papa John’s is now focusing on international expansion. The pizza chain has announced the signing of its largest-ever franchise agreement (and, according to CEO Rob Lynch, one of the largest franchise agreements in the restaurant industry) with Chinese private equity firm FountainVest Partners to open 1,350 new locations across South China over the next two decades.

According to Rob Lynch, the old motto was that if you could find a suitable location on the street and raise sufficient capital to build one, they would let you open a restaurant. But over the years, they have become much more selective about their partners. Now, they have more stringent requirements for newcomers: partners must have the capital and operational experience necessary to build restaurants at scale.

For instance, FountainVest is one of China’s largest private equity firms. He has also acquired a majority stake in the current Papa Johns’ franchisee CFB Group, which owns and operates approximately 160 restaurants in Shanghai and throughout southern China, as part of the transaction.

At the moment, Lynch said, Papa Johns’ operates in 50 countries, while their pizza industry competitors operate in more than 100. Pizza Hut has a sizable presence in China and has integrated itself into popular culture in a number of Asian countries. He believes Papa Johns’ could leverage Asia’s relative whitespace to establish a presence in markets where the Papa Johns’ brand is under-penetrated.

Papa Johns’ CEO Rob Lynch is not interested in hiring someone who worked as a bank teller last month and now wants a Papa Johns’ Franchise. He is open to exploring opportunities in Australia and Brazil, where the company currently does not have a presence, as well as in Cambodia and Germany, where Papa John’s opened its first location last year.

Papa Johns’ Franchise chief development officer, Amanda Clark, added that the company is looking at countries with a high GDP, a large population, and a high demand for pizza, as well as locations where their competitors are present.

Papa John’s has been concentrating its efforts on increasing its rate of growth. While development slowed in 2020, with only five net store openings, the company announced its largest development deal in North America in September 2020, with 49 stores planned in the Philadelphia market. The Louisville-based pizza chain followed that up with another record-breaking franchise announcement in September, this time in Texas, with the announcement of a 100-unit franchise deal.

Despite supply chain and labor market challenges, Papa John’s is confident in its ability to expand internationally in the future. They want to ensure that they enter a market with a strategy and a plan that ensures the franchisees’ success.