Papa John’s will be investing an additional $80 million into its U.S. franchises through 2020, the company announced Wednesday.
Continue Reading Below
The agreement, which will help franchises with marketing and offer them scheduled financial assistance, will begin in the third quarter of fiscal 2019 and end in 2020. The plan is supported by the Papa John’s Franchise Advisory Council (FAC), the company said.
“The strength of our brand and of our franchisees are both critical to Papa John’s long-term success,” Steve Ritchie, president and CEO of Papa John’s, said in a statement. “We’re pleased to announce that Papa John’s will make a significant investment in the exciting future of our brand. This is an important shared moment for Papa John’s and our committed franchisee base.”
The company will give its franchises financial help “in the form of lower royalties, royalty-based service incentives, and targeted relief,” the statement said.
It will also be investing more money into its marketing fund to promote the new Papa John’s ambassador, Shaquille O’Neal.
|PZZA||PAPA JOHN'S INTERNATIONAL||95.20||+1.35||+1.44%|
The company will also be paying O’Neal’s company, ABG-Shaq, a total of $4.125 million over three years in an endorsement deal, the company disclosed in an SEC filing on Monday.
The deal grants Papa John’s the right to feature O’Neal, his likeness, his nickname and other intellectual property in its advertisements. O’Neal will also serve as a brand ambassador for live appearances and social media campaigns.
In addition to his pay, Papa John’s will cover O’Neal’s expenses related to “marketing and personal services and grant him stock in the company. Aside from serving as a brand ambassador and member of Papa John’s board of directors, O’Neal has invested about $840,000 in nine Atlanta-area Papa John’s restaurants in a joint venture that gives him 30 percent ownership of the locations.
The endorsement deal is set to expire in March 2022, though it can be extended for one year by mutual agreement. The contract also includes unspecified exclusive rights and early termination clauses.
Papa John’s first announced its partnership with O’Neal in March, shortly after it settled a lengthy dispute with company founder John Schnatter. The pizza chain has overhauled its brand image and marketing campaigns in recent months after an incident in which Schnatter used a racial slur during a conference call exacerbated an ongoing sales slump.
Schnatter, who was long Papa John’s largest shareholder, reportedly plans to divest his interests in the company and has already begun selling some shares.
Papa John’s plans to roll out its first commercials starring O’Neal later this year, USA Today reported.
Fox Business’ Thomas Barrabi contributed to this report.