How Much Does It Cost to Open Mod Pizza Franchise?

Do you want to start a pizza shop business by buying Mod Pizza franchise? If YES, here is how much it cost to open a Mod Pizza franchise.

MOD Pizza is a lucrative fast casual pizza company, established in Seattle in 2008 by a couple, Scott and Ally Svenson. MOD’s individual artisan-style pizzas are made on demand, providing customers with the platform to create their own pizzas and salads, using fresh-pressed dough, signature sauces and over 30 toppings, all for one incredible price. This pizza company boasts of over 320 locations system-wide across 27 states and the united kingdom.

Cost to Open a Mod Pizza Franchise

The culture of MOD Pizza is not to build a franchise system with a large number of franchisees, instead, the company strives to form an alignment with a small team of franchisees that are very willing to help them strengthen and better the business.

MOD Pizza considers itself as a company that is more people-oriented than it is pizza-oriented. The focus of the company is to make sure the living wages of employees are paid so as to ensure they give back to the society. Before you can fully be approved as one of MOD Pizza franchisees, you must be able to fulfill most of the financial requirements. These fees are properly analyzed below;

1. Initial Franchise Fee: $30,000

Immediately you sign a Franchise Agreement for a single MOD Pizza Restaurant, you are expected to pay MOD Pizza an initial franchise fee of $30,000. You must pay the Initial Franchise Fee in full when you sign the Franchise Agreement.

The Initial Franchise Fee is uniform, fully earned by MOD Pizza upon execution by you of the Franchise Agreement and is not refundable under any circumstances.

2. Site Design Fee: $3,000

Once you’ve signed the Franchise Agreement, you must forward to MOD Pizza the information about the Restaurant’s site. You must pay a uniform, nonrefundable $3,000 site design fee before MOD Pizza starts work.

3. Opening Team: $0 to $15,000

The company currently offers an Opening Team to assist in training your Restaurant’s personnel during the Restaurant’s opening period.

MOD Pizza does not charge for this training for the first 2 MOD Pizza Restaurants that you or your affiliates open. For the third MOD Pizza Restaurant, MOD Pizza charges you a per diem fee plus travel expenses for each of its trainers, which is about $10,000 for the entire Opening Team.

For the fourth and each additional MOD Pizza Restaurant that you or your affiliates open, MOD Pizza charges you all of the costs and expenses it incurs to provide the training, including its trainers’ salaries and travel costs and expenses, which is about $15,000 for the entire Opening Team.
Note that these payments are not refundable and are due when MOD Pizza provides the training.
You will not incur these costs, and MOD Pizza will not send an Opening Team, for your (and your affiliates’) third and subsequent MOD Pizza Restaurants if you or your affiliates already operate a certified training store and use your (or your affiliate’s) own employees to provide the training.

4. Development Fee

This fee is $10,000 times the total number of MOD Pizza Restaurants that you agree to develop under the Area Development Agreement, including the first Restaurant

The company may provide certain prospective franchisees the right to develop multiple Restaurants in a specified development territory (“Development Territory”). You secure these rights by signing an area development agreement (“Area Development Agreement”) with MOD Pizza, and committing to develop a defined number of Restaurants over a specific time period (“Development Schedule”).
Note that once you sign an Area Development Agreement, you must pay the Initial Franchise Fee for the first Restaurant to be opened under the Area Development Agreement and pay a uniform development fee (“Development Fee”) equal to $10,000 times the total number of additional MOD Pizza Restaurants that you agree to develop under the Area Development Agreement (excluding the first Restaurant).
You are mandated to pay the Development Fee in full when you sign the Area Development Agreement. The Development Fee is fully earned by MOD Pizza upon execution of the Area Development Agreement by you as consideration for the exclusive rights you receive for the Development Territory and is not refundable under any circumstances even if you fail to develop any Restaurants under your Area Development Agreement.
You will sign a separate Franchise Agreement, in the then-current form being offered by MOD Pizza, for each MOD Pizza Restaurant you develop under the Area Development Agreement.
When you sign each subsequent Franchise Agreement, you will pay MOD Pizza the then-current Initial Franchise Fee for each MOD Pizza Restaurant.
But if you are complying with the Development Schedule and your other obligations under the Area Development Agreement, MOD Pizza will apply $10,000 of your Development Fee toward the Initial Franchise Fee payable under each subsequent Franchise Agreement.
You must sign your first Franchise Agreement at the same time you sign the Area Development Agreement, and you will sign the remaining Franchise Agreements in accordance with the Development Schedule set out in the Area Development Agreement.
No additional Area Development Agreements were signed during MOD Pizza’s fiscal year ending December 30, 2018. Therefore, it did not collect any Development Fees during such period.

5. Continuing Fee: 5% of weekly Revenues

Due Date: Wednesday each week for the preceding week.
Payable each week after the Restaurant starts business; the term “Revenues” is defined in the Franchise Agreement as the total dollar sales for your Restaurant.
Excluded from the definition of Revenues are sales, use, or gross receipts taxes; gift card sales; or the one-time sale of any FF&E (i.e. Furniture, Fixtures, and Equipment) or inventory items.
But if you sign an Area Development Agreement, then for the second and each following Franchise Agreement you sign for the Restaurants, you must develop under the Area Development Agreement, you will pay weekly Continuing Fees at the rate specified in MOD Pizza’s then-current form of Franchise Agreement. You will pay all other fees in the amounts specified in each Franchise Agreement that you sign for the Restaurants you develop under the Area Development Agreement.
If you open a Restaurant before the Required Opening Date, you will pay Continuing Fees at 50% of the standard rate (2-1/2% of your weekly Revenues) for the period of time from your actual opening date until the Required Opening Date, up to a maximum of 12 weeks.

6. Marketing Fees

2% of weekly Revenues (can be increased up to 3% on 90 days’ written notice)

Deposited in the advertising and marketing fund (the “Marketing Fund”) controlled by MOD Pizza.
Have it in mind that the company reserves the right to collect Continuing Fees and Marketing Fees on a four-week “Accounting Period” or other basis upon written notice to you.

7. Audit Fees

This is the amount incurred by MOD Pizza to audit your MOD Pizza Restaurant business; estimated to range from $2,000 to $5,000

Due Date: Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
Payable only if an audit shows that you understated your Revenues by more than 2% in any month, quarter, or year.

8. Transfer Fee

30% of the then-current Initial Franchise Fee for a single MOD Pizza Restaurant, plus training fees for training new Management Staff

Due Date: 60% of the Transfer Fee is paid with request for transfer approval and is not refundable; the balance is paid on or before the date of the transfer.
You must obtain MOD Pizza’s prior approval for a transfer under the Area Development Agreement or Franchise Agreement.

9. Collection Costs: This is the amount incurred by MOD Pizza to collect unpaid fees

Due Date: On demand.
Includes attorneys’ fees and related costs.

10. Administrative Fee: $50

Due Date: On demand.
Applies to past due payments payable to MOD Pizza.

11. Interest Charges: the lesser of 18% per annum or the maximum legal rate allowable by applicable law

Due Date: On demand.
Applies to past due payments payable to MOD Pizza.

12. Opening Team Fee and Expenses: up to $500 per person, per day, plus Travel Expenses

Due Date: Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
Payable in connection with the opening of your third and any subsequent Restaurant.

13. New Management Staff Training: $500 per day, plus Travel Expenses

Due Date: Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
Payable if you hire new Management Staff employees; Travel Expenses are payable if training is provided at your Restaurant.
“Travel Expenses” include all costs incurred for travel, transportation, food, lodging, telephone calls, automobile rental, and all other related expenses.

14. On-site Training or Consulting Fees: $500 per day, plus Travel Expenses

Due Date: Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
Payable if MOD Pizza conducts additional training at your Restaurant, you need additional days of opening assistance, or you request that consulting assistance be provided at your Restaurant.

15. Relocation Fee: 30% of the then-current Initial Franchise Fee for a single MOD Pizza Restaurant

Due Date: 60% of the Relocation Fee is paid when you request review of a new site; the balance is paid on the date you receive approval from MOD Pizza to relocate the Restaurant to a new Franchised Location.
Payable only if you request and receive approval from MOD Pizza to relocate the Franchised Location.
You are expected to sign the then-current Franchise Agreement for a full franchise term as provided in the Franchise Agreement and a general release of claims against MOD Pizza, its parent, subsidiaries, affiliates, and related people.
You will also be mandated to pay MOD Pizza a minimum Continuing Fee of $500 per week during the time your Restaurant is closed during the relocation process.
If your Restaurant is closed for longer than a week as a result of a casualty or for any other reason, you must pay MOD Pizza a minimum Continuing Fee of $250 per week.

16. Successor Fee: 30% of the then-current Initial Franchise Fee for a single MOD Pizza Restaurant

Due Date: When you sign a new Franchise Agreement.
Payable only if, after the expiration of your Franchise Agreement, you meet all requirements, as determined by MOD Pizza, and are approved by MOD Pizza to enter into a successor Franchise Agreement for your MOD Pizza Restaurant.

17. Local Marketing: Minimum of 2% of Revenues (1.5% of aggregate Revenues if you operate more than one MOD Pizza Restaurant)

Due Date: Payable to suppliers as incurred.
You must spend at least 2% of your Revenues on approved Local Marketing.
Note that when there are two or more MOD Pizza Restaurants in your Designated Market Area (“DMA”), you may be required to contribute Local Marketing Fees up to 2% of your Revenues to a local marketing group (the “Local Marketing Association”).
Local Marketing Fees will be applied to your 2% Local Marketing requirement.
Also, if you fail to meet the minimum Local Marketing Requirement, MOD Pizza may require you to pay the shortfall to the Marketing Fund.

18. Review of Unapproved Supplier: You will be mandated to reimburse MOD Pizza for the expenses it incurs inspecting or evaluating an unapproved supplier, estimated to range from $1,500 to $10,000

Due Date: Within 10 days after receipt of an invoice indicating the amount owed to MOD Pizza.
Payable only if you request that MOD Pizza review and approve a previously unapproved supplier.

19. Insurance: Cost of insurance, plus MOD Pizza’s expenses

Due Date: As incurred.
Once you fail to maintain required insurance, MOD Pizza may (but need not) obtain the insurance for you and charge you for premiums and costs.

20. Registration Fees: MOD Pizza does not currently charge any registration fees, but may in the future charge a fee of up to $500 per person

Due Date: Once you register for a convention, meeting, seminar, franchisee gathering, or other group session.
Your MOD Operator and all other individuals designated by MOD Pizza will attend each group event held by MOD Pizza.
The company will determine the topics covered duration, dates, and locations of all such events.

21. Indemnification: This will definitely vary under the circumstances

Due Date: Upon demand.
You’re expected to indemnify MOD Pizza for claims arising out of the development or operation of your Restaurant or your (or your representatives’) other acts or omissions.

22. Development Schedule Late Opening Fee Under Area Development Agreement: $1,000 per week

Due Date: As incurred.
If you fail to open a Restaurant by the required opening date and do not have a positive balance in your compliance week bank, you may pay this fee to obtain an extension of up to 26 weeks.

6 Steps on How to Open a MOD Pizza Franchise

The idea behind MOD Pizza franchise is for the business to take care of their employees, who will in turn take care of customers and the business will take care of itself. It also means that as a franchisee, you will always be supported and guided.

The restaurant offers for sale custom-made pizza with salads, sides and beverages. If you are thinking about how to start the MOD Pizza franchise, below is a simple but well detailed process of acquiring this franchise:

a. Understand the investment needed for a restaurant franchise

You must consider the cost of real estate, equipment and signs, licenses and permits, uniforms, the cost of insurance, etc.

b. Know your prior experience and strengths

It’s pertinent you take time to properly evaluate your prior business experience before applying to become a MOD Pizza fast causal pizza restaurant franchise owner.

c. Conduct a market research

It’s advisable you look at the market availability for MOD Pizza franchises and see if there are available markets in your location of interest before proceeding with the franchising application.

d. Have enough capitalization

To acquire the MOD Pizza restaurant franchise, you are expected to have a working capital of $30,000 to $100,000.

e. Submit your application

Visit the company’s website at www.modpizza.com and completely fill and submit the online application form. Ensure you input the correct information. Once you submit your application, it will be reviewed by the MOD Pizza franchise team.

You will be emailed a confirmation receipt upon reception of your online application, with additionally contact details of the franchise owner.

f. Approval & opening your MOD Pizza franchise

Once your financial and background checks are completed, you will receive franchise approval. Note that approval will only be issued to candidates who meet all the requirements of franchise owners.

Conclusion

MOD Pizza remains one of the country’s fastest-growing restaurant chains. The franchise terms of the agreement of MOD Pizza stipulates a ten (10) year initial franchise agreement. Renewal is dependent on how well you perform during this period.

How well you perform during this period is dependent on several personal factors like your choice of location or state, labor cost, size of the shop, commercial lease rates, as well as many others.