Papa Murphy's Franchise Loan: The Complete Financing Guide for Papa Murphy's Franchise Owners
Papa Murphy's stands apart in the pizza franchise world. As the nation's largest take-and-bake pizza chain, it offers entrepreneurs a lower-cost entry point into the quick-service restaurant industry, without the expense of commercial baking ovens or full kitchen buildouts. With approximately 1,400 locations across the U.S. and Canada, Papa Murphy's has proven itself as a durable, community-focused brand since its founding in 1981. But even with a streamlined business model, launching a Papa Murphy's franchise still requires significant capital, typically between $300,000 and $700,000. That's where smart franchise financing comes in.
In this guide, we'll break down exactly how much a Papa Murphy's franchise costs, what financing options are available, how to qualify, and what steps to take to get your funding secured and your store open as quickly as possible.
In This Article
- What Is Papa Murphy's? A Unique Franchise Model
- Papa Murphy's Franchise Costs Breakdown
- Top Financing Options for Papa Murphy's Franchisees
- SBA Loans for Papa Murphy's Franchises
- Equipment Financing for Papa Murphy's
- Alternative Lending Options
- How to Qualify for a Franchise Loan
- Papa Murphy's Financing by the Numbers
- The Loan Application Process
- Frequently Asked Questions
- Next Steps to Get Funded
What Is Papa Murphy's? A Unique Franchise Model
Papa Murphy's isn't your typical pizza franchise. Unlike Domino's, Pizza Hut, or even Little Caesars, Papa Murphy's operates on a take-and-bake model. Customers walk in, choose from a menu of freshly assembled pizzas, and take them home to bake in their own oven. There's no on-site baking, no delivery fleet, and no drive-through window.
This model creates several unique advantages for franchisees:
- Lower equipment costs: No commercial pizza ovens needed in-store, reducing buildout expenses significantly.
- Simpler operations: Fewer staff required per shift compared to full-service restaurants.
- Lower utility bills: Without high-heat ovens running all day, energy costs are reduced.
- Fresh product positioning: The brand competes on freshness and customization rather than speed.
According to franchise industry data cited by Forbes, franchises with well-known brand recognition and streamlined operating models tend to perform better during economic downturns, making Papa Murphy's an attractive option for investors seeking relative stability in the food service sector.
Founded in 1981 and headquartered in Vancouver, Washington, the brand was created through the merger of two regional take-and-bake chains, Papa Aldo's and Murphy's Pizza. Today it's one of the top five pizza chains by location count in North America, according to industry tracking data referenced by CNBC.
Key Insight: Papa Murphy's take-and-bake model means your equipment list is shorter and cheaper than most pizza chains. This can translate directly into a smaller loan requirement and faster path to profitability, which lenders view favorably.
Papa Murphy's Franchise Costs Breakdown
Before you apply for financing, you need a clear picture of what you're actually funding. Papa Murphy's total investment range is broad because costs vary depending on your market, the size of your store, whether you're building out a new space or taking over an existing location, and local labor and materials costs.
Here's how the investment typically breaks down:
| Cost Category |
Estimated Range |
| Initial Franchise Fee |
$25,000 |
| Leasehold Improvements |
$100,000 - $250,000 |
| Equipment and Fixtures |
$75,000 - $150,000 |
| Signage and POS Systems |
$15,000 - $30,000 |
| Initial Inventory |
$10,000 - $20,000 |
| Working Capital (3 months) |
$50,000 - $100,000 |
| Training and Travel |
$5,000 - $15,000 |
| Miscellaneous / Contingency |
$20,000 - $60,000 |
| Total Estimated Investment |
$300,000 - $700,000 |
Ongoing fees you'll need to budget for include a 5% royalty on gross sales and approximately 2% for the marketing fund. These recurring costs affect your cash flow and should be reflected in your financial projections when applying for a loan.
Papa Murphy's requires prospective franchisees to have a minimum net worth of $275,000 and at least $80,000 in liquid assets. These thresholds exist to ensure franchisees have the financial foundation to weather the early months of operation before cash flow stabilizes.
For more context on how this compares to other pizza franchise investments, check out our guide to pizza restaurant business loans which covers the range of financing needs across different pizza concepts.
Pro Tip: Many prospective Papa Murphy's owners underestimate working capital needs. Plan for at least three months of operating expenses before your store opens, and keep a cash reserve even after launch. Lenders will look favorably on borrowers who demonstrate conservative, realistic cash flow planning.
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Top Financing Options for Papa Murphy's Franchisees
There's no single "right" way to finance a Papa Murphy's franchise. The best approach depends on your credit profile, the size of your down payment, your timeline, and your overall financial situation. Most franchisees use a combination of financing sources rather than a single loan.
Here are the primary options available:
1. SBA Loans (Most Popular Choice)
Small Business Administration loans are the go-to option for most franchise investors. They offer long repayment terms (up to 25 years for real estate, 10 years for working capital), competitive interest rates, and government backing that reduces lender risk.
2. Equipment Financing
Specifically designed for purchasing business equipment. The equipment itself serves as collateral, often making it easier to qualify than unsecured loans.
3. Business Term Loans
Traditional lump-sum loans repaid over a fixed period. Good for covering buildout costs, franchise fees, or working capital.
4. Business Line of Credit
Revolving credit facility ideal for managing ongoing working capital needs, seasonal fluctuations, or unexpected expenses.
5. Alternative Business Lenders
Faster approval times and more flexible qualification requirements, though typically at higher interest rates than SBA or bank loans.
6. ROBS (Rollover for Business Startups)
Use 401(k) or retirement funds to invest in your franchise without early withdrawal penalties. Complex to structure but can eliminate the need for debt entirely.
SBA Loans for Papa Murphy's Franchises
For most Papa Murphy's franchisees, an SBA loan is the single most powerful financing tool available. The SBA doesn't lend money directly but guarantees a portion of the loan, reducing risk for participating lenders and enabling them to offer better terms than conventional loans.
SBA 7(a) Loan
The SBA 7(a) is the most versatile and popular small business loan program. Key features for franchise financing include:
- Loan amounts up to $5 million
- Repayment terms up to 10 years (equipment/working capital) or 25 years (real estate)
- Interest rates typically prime + 2.25% to prime + 4.75%
- Minimum 10% down payment usually required
- Can cover franchise fees, construction, equipment, working capital
SBA 504 Loan
Best for financing fixed assets like real estate or major equipment purchases. The 504 pairs a bank loan (50%) with a Certified Development Company (CDC) loan (40%), requiring only a 10% down payment from you. If you plan to own your building, this is worth exploring.
The U.S. Small Business Administration maintains a registry of approved SBA lenders. Working with a lender experienced in franchise financing specifically can speed up the process significantly, as they understand the franchise disclosure document (FDD) and how to underwrite franchise-based cash flow projections.
SBA Loan Qualification Requirements:
- Personal credit score of 680 or higher (ideally 700+)
- 2+ years of relevant business or management experience
- 10-30% cash injection (varies by lender)
- No recent bankruptcies or tax liens
- Viable business plan with realistic financial projections
- Adequate collateral (personal assets may be required)
Important Note: SBA loans require thorough documentation and can take 30 to 90 days to close. If you need faster access to capital, consider bridging with an alternative lender while your SBA loan processes. Crestmont Capital can help you structure a multi-source financing solution.
Equipment Financing for Papa Murphy's
One of the smartest financing moves a Papa Murphy's franchisee can make is using equipment financing specifically for your store's equipment needs. By separating equipment from your overall franchise loan, you can potentially qualify for two different facilities, preserving more of your SBA loan capacity for buildout and working capital.
Papa Murphy's equipment requirements typically include:
- Commercial refrigeration units and coolers (for storing fresh ingredients)
- Dough prep and mixing equipment
- Stainless steel prep tables and workstations
- Display cases and ingredient bins
- POS systems and customer-facing technology
- Packaging and labeling equipment
Note what's NOT on that list: commercial baking ovens. That's the power of the take-and-bake model. A traditional pizza restaurant might spend $50,000 to $100,000 on deck ovens or conveyor ovens alone. Papa Murphy's operators avoid that cost entirely, which can reduce total equipment financing needs considerably.
Equipment Financing Key Features:
- Loan amounts typically match the equipment cost (up to 100% financing in some cases)
- The equipment itself serves as collateral
- Terms of 3-7 years, matching the useful life of the equipment
- Approval based heavily on equipment value rather than just credit
- May include leasing options if you prefer not to own the equipment outright
Alternative Lending Options
Not every Papa Murphy's franchisee will qualify for SBA loans right away. Credit challenges, limited business history, or the need for faster funding often drive franchisees toward alternative lending options. While these loans carry higher interest rates, they can serve as stepping stones or bridge financing while longer-term options are arranged.
Fast Business Loans
Fast business loans from alternative lenders can be approved and funded in as little as 24 to 72 hours. These are particularly useful for covering immediate startup costs, deposits, or time-sensitive opportunities like lease signings.
Business Line of Credit
A business line of credit provides revolving access to funds, similar to a credit card but with much higher limits and lower rates. For Papa Murphy's operators, a line of credit is ideal for:
- Managing seasonal fluctuations in sales
- Covering unexpected repairs or equipment replacements
- Funding inventory ahead of peak periods (holidays, sporting events)
- Meeting payroll during slow months
Bad Credit Franchise Financing
If your credit score is below 680, options still exist. Bad credit business loans are designed for entrepreneurs who are still building or rebuilding their credit profiles. These may require stronger collateral, a larger down payment, or a co-borrower with better credit, but they keep the door open for qualified operators who don't yet have perfect credit.
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How to Qualify for a Papa Murphy's Franchise Loan
Lenders evaluate franchise loan applicants through several key lenses. Understanding what they look for allows you to put your best foot forward when you apply.
Credit Score
Your personal credit score is one of the first things lenders check. As a general guideline:
- 700+: Qualifies for most SBA and conventional loans with favorable rates
- 680-699: Still eligible for SBA loans; rates may be slightly higher
- 640-679: Likely need alternative lenders or a co-borrower
- Below 640: Specialized programs exist; expect higher rates and stricter terms
Liquidity and Net Worth
Papa Murphy's requires at least $80,000 in liquid assets and $275,000 net worth. Lenders will verify both. Your liquid assets demonstrate you can cover your down payment and early operating expenses without relying entirely on borrowed funds.
Business Plan and Financial Projections
A well-constructed business plan is your sales pitch to the lender. It should include:
- Market analysis for your target location
- Competitive landscape assessment
- Detailed financial projections (3-5 years)
- Staffing plan and operating cost breakdown
- Your personal resume and relevant experience
The U.S. Census Bureau's Small Business data resources can provide useful demographic and market data to support your location analysis.
Collateral
SBA loans and conventional bank loans typically require collateral. This may include business assets (equipment, inventory), real estate equity, or personal assets. The more collateral you can offer, the more comfortable lenders will be extending credit.
Industry Experience
Lenders prefer franchisees with relevant food service, retail, or management experience. If you lack direct restaurant experience, prior business ownership, management roles, or operations experience in other industries can help offset this.
For general guidance on small business loan qualification, our complete guide walks through every factor lenders consider when evaluating applications.
Papa Murphy's Franchise Financing: By the Numbers
Papa Murphy's Franchise Financing Snapshot
$300K-$700K
Total Investment Range
$25,000
Initial Franchise Fee
$80,000
Minimum Liquid Assets
~1,400
U.S. and Canada Locations
$275,000
Minimum Net Worth Required
Sources: Papa Murphy's FDD, SBA.gov, Crestmont Capital franchise financing data
The Loan Application Process: Step by Step
Applying for a Papa Murphy's franchise loan doesn't have to be overwhelming. Breaking it into stages makes the process manageable and improves your chances of approval.
Phase 1: Preparation (4-8 weeks before applying)
- Check your credit report and dispute any errors (AnnualCreditReport.com offers free access)
- Build or strengthen your personal financial statement
- Secure your Papa Murphy's franchise agreement and FDD
- Write your business plan and financial projections
- Gather 2-3 years of personal tax returns
Phase 2: Lender Selection (2-4 weeks)
- Research SBA-approved lenders with franchise experience
- Compare loan products, rates, and terms
- Submit pre-qualification applications to multiple lenders simultaneously
- Evaluate offers side by side
Phase 3: Application and Underwriting (2-10 weeks, depending on loan type)
- Submit complete loan application with all required documents
- Respond promptly to lender requests for additional information
- Order appraisals if real estate is involved
- Review loan commitment letter carefully before signing
Phase 4: Closing and Funding
- Sign all loan documents
- Funds disbursed to escrow or directly
- Franchise agreement finalized with Papa Murphy's
- Begin buildout and store opening process
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Frequently Asked Questions About Papa Murphy's Franchise Loans
How much does it cost to open a Papa Murphy's franchise?
The total investment to open a Papa Murphy's franchise typically ranges from $300,000 to $700,000, which includes the $25,000 franchise fee, equipment, leasehold improvements, initial inventory, and working capital. Costs vary based on location, store size, and local real estate markets.
What is Papa Murphy's franchise fee?
Papa Murphy's charges an initial franchise fee of $25,000. This fee grants you the right to operate under the Papa Murphy's brand and access their take-and-bake business model, recipes, training, and ongoing support systems.
Can I get an SBA loan for a Papa Murphy's franchise?
Yes, Papa Murphy's franchises are eligible for SBA 7(a) loans and SBA 504 loans. SBA loans offer competitive interest rates and longer repayment terms, making them a popular choice for franchise financing. You will need good credit (typically 680+), a solid business plan, and relevant experience.
What credit score do I need to finance a Papa Murphy's franchise?
For SBA loans, most lenders require a credit score of at least 680. Traditional bank loans typically require 700+. Alternative lenders may work with scores as low as 600, though at higher interest rates. The stronger your credit profile, the better your loan terms will be.
How much cash do I need to open a Papa Murphy's franchise?
Papa Murphy's requires franchisees to have a minimum net worth of $275,000 and liquid assets of at least $80,000. Most lenders will also require you to inject 10-30% of the total project cost as a cash down payment, depending on the loan type and your qualifications.
What is the royalty rate for Papa Murphy's?
Papa Murphy's charges a royalty fee of 5% of gross sales. There is also a marketing fund contribution of approximately 2% of gross sales. These ongoing fees should be factored into your cash flow projections when applying for franchise financing.
What equipment financing options are available for Papa Murphy's?
Papa Murphy's equipment needs include refrigeration units, prep tables, dough mixers, and display cases. Equipment financing loans allow you to purchase or lease equipment with the equipment itself serving as collateral, typically requiring 10-20% down and offering repayment terms of 3-7 years.
How long does it take to get approved for a franchise loan?
Approval timelines vary by loan type. Alternative lenders can approve and fund in as little as 24-72 hours. SBA loans typically take 30-90 days due to more extensive underwriting. Traditional bank loans usually take 2-6 weeks. Starting the application process early is strongly recommended.
Does Papa Murphy's offer in-house financing?
Papa Murphy's does not typically offer direct in-house financing. However, they may have relationships with preferred lenders familiar with their franchise model. Most franchisees pursue SBA loans, equipment financing, or alternative business lenders to fund their investment.
What is the take-and-bake pizza business model?
Papa Murphy's unique take-and-bake model means customers purchase freshly prepared, unbaked pizzas and cook them at home. This model eliminates the need for on-site ovens, reduces utility costs, and lowers the overall franchise investment compared to traditional pizza restaurants, since no commercial baking equipment is required in-store.
What are the advantages of financing a take-and-bake franchise?
Take-and-bake franchises like Papa Murphy's have lower equipment costs than full-service pizza restaurants since no commercial baking ovens are needed. This reduces the total capital required, potentially making it easier to qualify for financing. Lower overhead also supports stronger cash flow for debt repayment.
Can I use a business line of credit for Papa Murphy's franchise costs?
Yes, a business line of credit can be used to cover working capital, initial inventory, and ongoing operational expenses for your Papa Murphy's franchise. Lines of credit are revolving, so you only pay interest on what you borrow, providing flexibility for managing cash flow fluctuations.
What happens if I have bad credit but want to open a Papa Murphy's franchise?
If your credit score is below 680, alternative lenders and specialized franchise lenders may still be able to help. Options include bringing on a co-borrower with stronger credit, offering additional collateral, or pursuing revenue-based financing. Working to improve your credit score before applying is also recommended.
How many Papa Murphy's locations are there?
Papa Murphy's operates approximately 1,400 locations across the United States and Canada, making it one of the largest take-and-bake pizza chains in North America. The brand was founded in 1981 and is headquartered in Vancouver, Washington.
What documents do I need for a Papa Murphy's franchise loan application?
Typical documents required include: personal and business tax returns (2-3 years), personal financial statement, franchise disclosure document (FDD), business plan with financial projections, proof of liquid assets, government-issued ID, and any existing business financial statements. Having these ready speeds up the approval process.
Next Steps to Get Your Papa Murphy's Franchise Funded
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1
Check your credit score and financial position. Pull your credit report, review your liquid assets, and estimate your net worth. This tells you which loan programs you're likely to qualify for right now.
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2
Request Papa Murphy's FDD. Contact Papa Murphy's franchise development team to receive the Franchise Disclosure Document. This provides the financial details lenders will need to underwrite your loan.
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3
Build your business plan. Identify your target market, run location demographics, and build 3-5 year financial projections. A strong business plan dramatically improves your approval odds.
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4
Apply with Crestmont Capital. Submit your pre-qualification application. Our team will review your profile and match you with the best loan products available for your situation, whether SBA, equipment financing, or alternative lending.
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5
Close your loan and open your store. Once funded, finalize your franchise agreement with Papa Murphy's, complete your buildout, and get ready for your grand opening.
Whether you're opening your first Papa Murphy's or expanding to multiple locations, having the right financing partner in your corner makes all the difference. Crestmont Capital specializes in franchise financing and has helped hundreds of business owners across the country secure the capital they need to grow.
Apply for Your Papa Murphy's Franchise Loan Today
Disclaimer: The information provided in this article is for general educational purposes only and is not financial, legal, or tax advice. Franchise investment costs, loan terms, and qualification requirements vary and are subject to change. Always consult with a qualified financial advisor, attorney, and franchise consultant before making any investment decisions. Crestmont Capital is a commercial lender and does not provide legal or tax advice. Loan approval is subject to lender underwriting standards and is not guaranteed.