Papa Johns Franchisees Vote to Bring Back Local Ad Co-ops

Papa Johns franchisees just voted to spend more of their marketing money close to home. Nearly all of them.

Chief executive Todd Penegor told Nation's Restaurant News that 98.5% of the franchise system voted for a new marketing framework. The national ad fund contribution drops to 5% of sales from 6%, and a local co-op contribution of 2% returns, up from zero. The company's quarterly report says the local spend becomes required across the system beginning in 2027.

"We're aligned to get all [local marketing] co-ops stood back up to where we were prior to 2024 and it's full steam ahead," Penegor told NRN.

The company is paying franchisees to make the switch. It is raising commissary margin support by 100 basis points and cutting technology fees by another 25 basis points, according to NRN.

The urgency is in the numbers. North America comparable sales fell 8.3% in the third quarter, with franchised restaurants down 8.5% and company-owned restaurants down 7.5%. NRN counts it as the ninth negative quarter in the past 10. Papa Johns opened only 11 restaurants in North America in the quarter and said it expects fewer new openings there in 2026. 24/7 Wall St. reported that the company cut its full-year adjusted EBITDA outlook to about $175 million, from $180 million to $190 million.

Ownership is shifting too. Papa Johns has refranchised 113 company restaurants since the third quarter of 2025, including 28 in Florida during the latest quarter, and said it is pursuing more. Pizza is a hard category right now: Domino's cut its U.S. store outlook last month as franchisee profits slipped.

The international business is telling a different story. Three days before earnings, Papa Johns and PJP Investments Group extended their Middle East development deal through 2036, aiming to grow from 167 restaurants to more than 400 across the UAE, Saudi Arabia, Jordan and newly added Iraq.

Back home, the bet is simple. A franchisee who knows his delivery radius should spend a dollar better than a national media plan does. Papa Johns finds out in 2027, when the money starts moving.