Deal Helps Papa John’s Franchisees Weather Scandal

A discount-heavy agreement negotiated between the Papa John’s Franchise Association and the company is designed to help local franchisees move past the high-profile scandal that led to the departure of the company’s namesake.

The scandal surrounding the founder of Papa John’s Pizza had a deep effect that went far beyond the company’s leadership. There also were the franchisees to think about.

Fortunately, those franchisees have an association, which worked on a plan to assist them during a time when they might be feeling the impact of negative blowback.

The Papa John’s Franchise Association (PJFA) worked with the  company’s Franchise Advisory Council on a deal to assist franchisees, by offering discounts on royalties, food-service pricing, and other costs of operating a Papa John’s franchise through the rest of the year.

The deal is necessary in part because of the scandal that led to founder John Schnatter’s ouster. The company’s namesake and longtime spokesman faced controversy and resigned as the firm’s CEO after arguing that a decline in the NFL’s television ratings (caused by a political controversy around players kneeling during the national anthem) hurt the company’s sales. The problem worsened after Forbes revealed that Schnatter reportedly used a racial slur during a media training phone call earlier this year. That revelation led to Schnatter stepping down as the company’s chairman, a decision he immediately regretted. He has since attempted to regain control of the company through various means, including a lawsuit.

The problem for franchisees is that while the controversy around Schnatter isn’t their fault, it’s affecting their business. The relief agreement that PJFA negotiated with the company and its franchise advisory council is designed to help the stores weather the storm.

In comments regarding the assistance program, PJFA President Vaughn Frey stated that the organization was standing behind the CEO that replaced Schnatter, Steve Ritchie.

“We believe it is time for the founder to move on. Steve is pursuing the right initiatives to reinvigorate growth and recognizes the importance of working together to move forward successfully,” Frey said in a news release. “We appreciate the assistance being extended to our franchisees and believe the assistance program will help mitigate the impact that the founder’s inexcusable words and actions have had on franchisees.”

Ritchie added that the agreement highlighted the “open conversation” the company and its franchisees had over the crisis.

“People are at the heart of our business, and this program is one of many actions we are taking to prioritize our team, address the recent challenges and move Papa John’s forward,” Ritchie added in the release.

(Elvert Barnes/Flickr)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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