Entrepreneurship & Small Business

Pizza Pizza franchise

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Newbie
Nov 8, 2010
23 posts

Pizza Pizza franchise

I am thinking if i should invest in a Pizza Pizza Franchise. How hard is it to get approved for The Canada Small Business Financing Program? anyone have any experience with this?
104 replies
Member
Nov 30, 2009
491 posts
219 upvotes
That program appears to be specifically for improving the physical assets of an existing small business, not acquiring one.

Franchises in general are a fairly bad idea imo, especially established ones like Pizza Pizza or Tim Hortons. You can make money at it, but most just lose their shirt; the risk vs reward is almost always very poor compared to the average returns on the stock market or real estate.
Member
Mar 15, 2009
487 posts
52 upvotes
I think franchises must be also seen like Real Estate or stock market... with a vision of the future of the company in general.
For example, Tim Horton is now very very expansive. But for someone who bought a franchise 10 years ago, he probably had a good price. More, if he sells his business now he would make a massive profit.
Deal Addict
Apr 22, 2009
1058 posts
50 upvotes
London ON
i hate how popular tim hortons is now

cant go down a stretch or road without there being 2-3 within 5 kms of eachother

at one intersection theres a small shop inside a canadian tire gas bar
turn the corner and theres a full tim hortons > :(
Deal Addict
Apr 22, 2009
1058 posts
50 upvotes
London ON
Korozive wrote: I think franchises must be also seen like Real Estate or stock market... with a vision of the future of the company in general.
For example, Tim Horton is now very very expansive. But for someone who bought a franchise 10 years ago, he probably had a good price. More, if he sells his business now he would make a massive profit.

also did a quick search on franchise info
Our franchise fee is $30,000. The franchise fee secures the right to own and operate a Pizza Pizza franchise in a given territory and the use of the Pizza Pizza trademarks, trade name, recipes and retail marketing plan. Pizza Pizza also provides:

* Site selection, lease negotiation
* Assistance from franchise operations experts both before and after the opening of your restaurant
* State-of-the-art distribution centre
* Administrative systems
* Comprehensive training program consisting of classroom instruction and practical restaurant experience
* Operational support
* Financing assistance is available to qualified purchasers



3. The Franchise Fee buys a lot and the support services are great. How much money is required to open a Pizza Pizza franchise?

In order to obtain financing from a chartered bank or trust company, you must have at least 25 to 30% of the purchase price as an unencumbered cash down payment.
and theres royalty fee of 6% of sales every week and an advertising fee of 6% weekly as well
Deal Addict
Mar 18, 2005
4423 posts
150 upvotes
Mississauga
jordanr1987 wrote: also did a quick search on franchise info



and theres royalty fee of 6% of sales every week and an advertising fee of 6% weekly as well

but wouldn't it be easly to do 10-25% of the transactions off the books?
Newbie
Mar 4, 2009
50 posts
2 upvotes
Niagara Falls
TinyTank wrote: but wouldn't it be easly to do 10-25% of the transactions off the books?

You wish. They supply the material and monitor sales and consumption like a hawk. If they find any proportion gone wrong they will send an arbitrary fine or warning. Can't start a business based on how much you can scrape off the bottom.

Pizza Pizza used to be good margin. But now with the competition, economy and slashed prices, there is not much profit to make. Bring in your family to run the show and you can survive.

BTW, did you notice that their cheese in no more rennet free and more oily?
Deal Addict
Dec 17, 2001
2497 posts
388 upvotes
Ajax
RETAILER wrote: You wish. They supply the material and monitor sales and consumption like a hawk. If they find any proportion gone wrong they will send an arbitrary fine or warning. Can't start a business based on how much you can scrape off the bottom.

Pizza Pizza used to be good margin. But now with the competition, economy and slashed prices, there is not much profit to make. Bring in your family to run the show and you can survive.

BTW, did you notice that their cheese in no more rennet free and more oily?

Well said. They brought in the LCD screens (at franchisee's expense of course) for their cash registers with a big "No receipt, your order is free," just to catch/stop franchisees from skimming.

I had some friends who gave up their franchise (losing money), and just before they did so, some clown came up from HQ to advise them. His big advice was to turn the back room lights off during the day.

Nice eh? The fines system is a joke. pizza's late? pay for the pizza and then pay Pizza Pizza head office a fine.

Better to open an independent shop, make really good pizza and get a good reputation. If you decide you want to walk away from a Pizza Pizza franchise, the do nice things like devalue all the equipment because it's used etc.

Nothing like having a green pepper shipped from head office because you have to. Get caught buying ingredients locally and it's a fine. The prices to their franchisees on ingredients is not competitive at all.
Deal Expert
May 17, 2008
15134 posts
160 upvotes
Kuurgen wrote: Well said. They brought in the LCD screens (at franchisee's expense of course) for their cash registers with a big "No receipt, your order is free," just to catch/stop franchisees from skimming.

I had some friends who gave up their franchise (losing money), and just before they did so, some clown came up from HQ to advise them. His big advice was to turn the back room lights off during the day.

Nice eh? The fines system is a joke. pizza's late? pay for the pizza and then pay Pizza Pizza head office a fine.

Better to open an independent shop, make really good pizza and get a good reputation. If you decide you want to walk away from a Pizza Pizza franchise, the do nice things like devalue all the equipment because it's used etc.

Nothing like having a green pepper shipped from head office because you have to. Get caught buying ingredients locally and it's a fine. The prices to their franchisees on ingredients is not competitive at all.

Great advice! Also, rather than buying shares in Apple, you would be better off you started your own successful electronics company.

Starting your very own independent business is a lot more work and risk. The rewards are higher for sure, but I'm not sure if they are even proportional to the higher risk and work.

When you buy a franchise, you are buying into a (hopefully successful) business. You wont have a ton of control, that is for sure, but that is kind of necessary. When you order a Pizza from Pizza Pizza, anywhere in Ontario, you expect to get the same product.

The fines for late delivery does make a bit of sense. The head office is the one who is getting all the telephone and online orders. When you order a pizza, and it comes late, you don't know which franchisee ****ed up, you just know Pizza Pizza ****ed up. If they are going to provide you with all that delivery business, they have a large incentive to make sure you deliver on time.

You need to understand what you are getting into. The issues you brought up are really just facts of being a franchisee.
Deal Addict
Dec 17, 2001
2497 posts
388 upvotes
Ajax
BornRuff wrote: The fines for late delivery does make a bit of sense. The head office is the one who is getting all the telephone and online orders. When you order a pizza, and it comes late, you don't know which franchisee ****ed up, you just know Pizza Pizza ****ed up. If they are going to provide you with all that delivery business, they have a large incentive to make sure you deliver on time.

They get compensated very well for orders coming into their call centre. that 3.50 delivery charge or however much it is now goes to the call centre and NOT the drivers or the franchisee as they would have you believe.

So not only do they get paid 3.50 for that, they put the cost of a late pizza on the franchisee as well as a fine on top.
Pizza Pizza has been accused of heavy handed tactics in the past. You're comparing pizzas and iphones. Big difference don't you think?

To put it bluntly, PP cares very little whether or not you succeed.

I understand your point about it buying into a successful formula, but too often this particular formula with this company is a recipe for long hours and little reward.
Starting your very own independent business is a lot more work and risk. The rewards are higher for sure, but I'm not sure if they are even proportional to the higher risk and work.
You've obviously never heard the horror stories of people trying to get out a franchise.
Deal Expert
May 17, 2008
15134 posts
160 upvotes
Kuurgen wrote: They get compensated very well for orders coming into their call centre. that 3.50 delivery charge or however much it is now goes to the call centre and NOT the drivers or the franchisee as they would have you believe.

So not only do they get paid 3.50 for that, they put the cost of a late pizza on the franchisee as well as a fine on top.
Pizza Pizza has been accused of heavy handed tactics in the past.
Reality is that you will not find a business where somebody else maintains a costly system designed specifically to provide you with orders, and does this at no charge to you. It is actually quite beneficial to the franchisee that they permit you to pass the cost of this service onto the customer rather than take it out of the posted price you receive.

If a pizza arrives on time or not is entirely up to the franchisee and his/her staff. The penalty is there to ensure that you adhere to their standards.
Kuurgen wrote: You're comparing pizzas and iphones. Big difference don't you think?
No, the product has nothing to do with it. I'm comparing the difference between investing in an established successful company and starting up your own.
Kuurgen wrote: To put it bluntly, PP cares very little whether or not you succeed.

I understand your point about it buying into a successful formula, but too often this particular formula with this company is a recipe for long hours and little reward.
One of the main reasons a company sells franchises is so that they can expand with less risk and capital investment from themselves. PP certainly wants you to succeed, because they don't want the stream of royalties to dry up, but no, they wont shed a tear if your location fails. Like every situation in life, especially in business, you gotta look out for your own interests, cuz everyone else is primarily concerned with their interests, not yours.

Owning a small business in general is usually a lot of work, and often not as much reward as you might think you deserve for all that work. Buying into a franchise removes a huge chunk of the work in starting up a business, so ya, you have to give a large chunk of your income to the franchiser as a result.
Kuurgen wrote: You've obviously never heard the horror stories of people trying to get out a franchise.

I've heard of some. Once you have invested in setting up any small business, it is never a simple process to "get out" of your investment. Breaking leases, breaking contracts, selling equipment, letting staff go, all has it's challenges. Being a franchise does add some unique challenges though, as you point out.

When I say there is less risk, I am talking about how if you set up a Pizza Pizza, or a Tim Horton's, it generally has a much higher chance of being successful than if you set up a similar independent store. There is already a very well built up customer base for those brands.
Deal Addict
Dec 17, 2001
2497 posts
388 upvotes
Ajax
BornRuff wrote: One of the main reasons a company sells franchises is so that they can expand with less risk and capital investment from themselves. PP certainly wants you to succeed, because they don't want the stream of royalties to dry up, but no, they wont shed a tear if your location fails. Like every situation in life, especially in business, you gotta look out for your own interests, cuz everyone else is primarily concerned with their interests, not yours.

Yes, I think that's the real issue, is people who don't have a clue and don't look at the hard numbers get caught up in buying something like a franchise.
I may be a bit close to this, because I've seen firsthand from a friend who drank the franchisee koolaid, only to find out all that glittered was not gold.
When I say there is less risk, I am talking about how if you set up a Pizza Pizza, or a Tim Horton's, it generally has a much higher chance of being successful than if you set up a similar independent store. There is already a very well built up customer base for those brands.
Agreed, I would never go against an established Tim Horton's, there's just no point at all. My thought was with pizza you have a better chance of getting a good reputation, so long as you put out quality product.


I'm not a franchise type of guy, but that definitely doesn't mean if I was setting up my own store that I wouldn't borrow some established outfit's processes.


Pizza Pizza has a very bad reputation when it comes to dealing with it's franchisees.

http://www.wikidfranchise.org/19930925-millions-are

Lorn Austin is no longer with the company, he was responsible for the 967-1111 jingle, and was drummed out unceremoniously for whatever reasons.
Deal Expert
May 17, 2008
15134 posts
160 upvotes
Kuurgen wrote: Yes, I think that's the real issue, is people who don't have a clue and don't look at the hard numbers get caught up in buying something like a franchise.
I may be a bit close to this, because I've seen firsthand from a friend who drank the franchisee koolaid, only to find out all that glittered was not gold.
Looking at the numbers does not make owning a franchise seem like a 100% bad idea. You are right though, many complaints about franchise ownership do come from people who do not fully understand what they are getting into. The issues you brought up are a good example. They are all things you should have known before buying into the franchise. They are not necessarily problems, but if you don't like that set up, don't go the franchise route.

Lots of people do very well with franchises. Every business has stories of people who fail though, that is the nature of the real world.
Kuurgen wrote: Agreed, I would never go against an established Tim Horton's, there's just no point at all. My thought was with pizza you have a better chance of getting a good reputation, so long as you put out quality product.

I'm not a franchise type of guy, but that definitely doesn't mean if I was setting up my own store that I wouldn't borrow some established outfit's processes.
You can only mimick other stores processes to an extent. Many things are behind the scenes and hard to copy from the outside, and other things are simply patented. I don't really know if Pizza is an easier industry than coffee, but ya, who knows.
Kuurgen wrote: Pizza Pizza has a very bad reputation when it comes to dealing with it's franchisees.

http://www.wikidfranchise.org/19930925-millions-are

Lorn Austin is no longer with the company, he was responsible for the 967-1111 jingle, and was drummed out unceremoniously for whatever reasons.

That article is almost 20 years old, there much be more recent info about the actual outcome of those allegations.
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User avatar
Feb 2, 2006
6219 posts
232 upvotes
Tristan12345 wrote: I am thinking if i should invest in a Pizza Pizza Franchise. How hard is it to get approved for The Canada Small Business Financing Program? anyone have any experience with this?

First step, hire a cute girl to work the front counter. Second step get every one of your male family members to work in the back.
Newbie
Mar 4, 2009
50 posts
2 upvotes
Niagara Falls
Franchise and family work for pennys per hour, 7 days a week 12 to 16 hrs a day.
Drivers get less than 7$ an hour plus tips (which has gone down drastically with the present economy)
Drivers spend more on gas, get stuck in traffic with new lights every six months.
Raw material cost goes up like crazy, with no relation to the market rate and if you buy elsewhere they monitor your sales and purchases and fine you.
Terrific competition all over . prices of pizza has gone down everywhere. So your income is reduced. But PP get the same cut.
Marketing and advertisements have been cut drastically. When was the last time you saw the fold out flyers?
No more menu's too.
Giving out gift vouchers, free pizza for birthday etc. to all and sundry. You have to pay with a grin.
Fine for everything.
Rent gone up, utility gone up, internet, phone all gone up.

One word answer. Keep your money under the pillow. It is much better.
Deal Addict
Dec 17, 2001
2497 posts
388 upvotes
Ajax
BornRuff wrote:
That article is almost 20 years old, there much be more recent info about the actual outcome of those allegations.

At one time I was up on all the outcomes, there's a few franchise info websites that keep up to date tabs on them. And yes, it was 20 years ago, but it's still the same guy in charge.

Rather than continue, I'll just say that IMHO the Pizza Pizza franchise is one to be avoided. I see we've got a recent post from what sounds like an experienced owner.

Here's another article, yes it's old, but it's still the same company

http://www.wikidfranchise.org/19930503-scared-broke
Deal Addict
Dec 18, 2007
1258 posts
26 upvotes
RETAILER wrote: Y

BTW, did you notice that their cheese in no more rennet free and more oily?


No true. The same FAQ is still on the web site:
4. Does your cheese contain enzyme(s) derived from animal source? Our mozzarella (fresh/frozen) and goat cheese contain microbial enzyme that is derived from non-animal source. Our cheese blend, feta, provolone and parmesan cheese contain lipase originates from animal source.
Member
User avatar
Aug 20, 2010
287 posts
77 upvotes
I don't know much about franchises, but I know what kind of pizza I like.
Pizza Pizza is cardboard! It's a step below some of the decent frozen pizzas like Dr. Oetker and President's Choice.

Now, if you want something different, check out Topper's Pizza
http://toppers.ca/franchising.html
It was founded in the Copper Cliff area of Sudbury in the early 80s and is probably the reason why the Greater City of Sudbury has only maybe 1 Domino's and maybe 2 Pizza Pizzas, it's that good.

In my opinion, it's better tasting than Pizza Pizza, Pizzaville, Dominos and fairly on par with Pizza Hut but not as greasy.

So check them out and try their product.

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