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“Americans love pizza” is what we all know, but what you might not know is that almost 60 million Americans eat it once a week. And with franchising becoming more popular, many wonder if the increased competition will put the brakes on this market.
Pizza is one of the most reliably popular fast food meals out there. Still, when it comes to franchising, we see many underlying issues that make doing business quite a risky proposition. It is so crowded that even the best places will not earn as much as expected from such a significant investment.
Are you looking at Marco’s pizza and its franchise opportunity?
Marco’s Pizza® has named John King as Senior Vice President of Operations, a 25-year industry veteran with extensive experience in operation. King will lead the strategic direction and execution of franchise operations for the rapidly-growing Marco’s Pizza chain. “John is a tremendous asset to our executive team,” said Jack Butorac, president, and CEO of Marco’s Franchising, LLC.
While we are confident in Marco’s pizza new management team, we are still not optimistic about the franchise opportunity.
For over two decades, Fransmart has been a successful franchisor of Five Guys, QDOBA, Halal Guys, and more. By partnering with emerging brands, Fransmart was able to help these franchisors develop successful franchisees. We have created thousands of jobs and invested in companies like Sweetgreen, Cava, and Chloe through franchising.
We have a thorough understanding of the industry’s intricacies and can help you start your pizza delivery franchise without any significant setbacks. Call us now to Know more about Pizza Franchise opportunities.
Our team’s in-depth legal analysis of the Marco Pizza brand has revealed several cases that aren’t in line with its guidelines and could be deemed genuinely troubling. Disgruntled franchisees have filed several court cases against the parent company regarding franchisor support and unethical behavior towards the customer.
In addition, there are many reports from the previous year describing high royalties paid to the parent company, which could put off potential investors.
Marco’s Pizza: An Overview
Marco’s Franchising, LLC has been in business for over 40 years and has around 1000 stores globally. One of the famous and growing names in the restaurant industry, they have pizza in many sizes and varieties for delivery, takeaway, dine-in, or catering. Other than Pizzas, their secondary offerings are hot and cold sandwiches, salads, chicken wings, cheese bread, beverages, and desserts.
As Marco’s Pizza operates in the fast-food industry, the restaurant has an uncomplicated menu. Customers can order pizzas, sides, side salads, or toppings. Most locations have 12 seats in a fast-casual atmosphere.
Marco’s Pizza does not have dine-in areas on every site. Whereas carryout, delivery, and catering orders are available at all locations.
Marco’s pizza has distinguished itself from others by calling itself an “affordable family meal” restaurant and not a bargain store. Unlike the other ten pizza brands, it was started by the Italian. They claim their authentic pizza base is made fresh on-site every day with cheese that has never been frozen and a pizza sauce recipe that was the origin of its founder Pat Giammarco.
Marco’s Pizza requires the following financial considerations from its franchises:
- Net worth requirement: $400,000.
- Liquid capital requirement: $125,000
- Initial franchising fee: $25,000
- Royalty Fee: 5.5%
- Ad royalty fee- 7%
- Franchisees can expect a total investment of $293,515 – $619,710
Problems Of Investing In Marco’s Pizza:
Though selling Pizza is a booming business, there are many risks involved with this work. We have researched Marco’s Pizza FDD,
Various online feedback from industry insiders has given us many factors that could risk the success of your investment in the Marco’s Pizza franchise.
#1 Marco’s Pizza Litigation Over The Years:
Marco’s Pizza has had a highly complex relationship with its franchisees, suppliers, and employees. There have been multiple allegations against the company for tortious interference, defamation, fraud, conspiracy, and racketeering in the past.
The other problems with these lawsuits are that they are pretty similar and involve transfer and renewal of the franchise location, which has led to an ongoing dispute between them when refused by the company.
#2 Advertising and Marketing Fees is very high:
Marco’s Pizza has many ongoing fees that a franchisee must pay, which takes away a considerable chunk of their profits. The company requires its franchises to pay a national or regional advertising fee of 4% on the gross sales. Over this, a local store marketing fee can range between 0.5% and 7% of the total sales. Additionally, there is also a brand development fund that is 1% of the store’s gross sales. Even marketing and advertising are worthwhile expenses, it takes away a large portion of the projected revenue of the store. Be sure to consider these costs when you think of taking a franchise of Marco’s pizza.
#3 Income From The Franchise Location May is not What It Seems:
As with any other franchise in the restaurant industry, a location of Marco’s Pizza might show good numbers against gross sales, but it is not as high as it seems. This number is primarily made up of expenses, such as initial costs and ongoing operational costs. So while the sales could be huge, the fees are also hefty in running an F&B franchise business.
The income with Marco’s Pizza franchise is not more than $100,000 in a year, even for only a few top locations that have been known for some time. The new franchise owner may find it challenging to earn a decent profit in the first few years.
#4 Competitive And High Risks QSR Industry:
Pizza is America’s most popular food. Unfortunately, this makes it a competitive industry that requires significant investments and monthly royalty payments to thrive. While many big brands compete with, many small, local brands are also in the market. These smaller, less well-known businesses require little investment and can be profitable despite the risk.
Conclusion
Marco’s Pizza is looking to grow aggressively in the coming years. To do that, they’ve been encouraging franchisees to sign up for multiple-store contracts. But this might not be an excellent idea for investors. Before signing on the dotted line, make sure you know the investment’s conditions and implications.
Sources:
https://www.franchisedirect.com/foodfranchises/marcos-pizza-franchise-09548/ufoc/
https://www.franchisegator.com/franchises/marcos-pizza/
https://www.entrepreneur.com/franchises/marcospizza/282563
https://marcosfranchising.com/2016/05/19/three-ways-marcos-pizza-franchise-challenges-competition/
https://www.vettedbiz.com/marcos-pizza-franchise-cost-worth-the-profit-potential/