Pepper Palace Franchise Cost, Revenue & Review 2026
- Investment
- $211K – $288K
- Disclosed sales
- $349K
- gross sales, not profit
- SBA charge-off
- Not SBA-matched
Data from FDD filing
Analysis by FranchiseVerdict Research · Methodology
Pepper Palace is a retail franchise selling hot sauces, salsas, spices, and gourmet foods, with in-store tasting. Franchisees run shops managing inventory, sampling, and foot traffic in tourist and mall locations.
FranchiseVerdict summary · 2026
A Pepper Palace franchise requires a total initial investment of $211K – $288K, including a $50K franchise fee and an ongoing 6.0% royalty[2]. Per the 2025 FDD, average unit revenue was $349K[2]. FranchiseVerdict grade: B (Above average), an editorial assessment, not investment advice. Run a live ROI scan →
Limited operating history: franchising since 2025. A system this young has fewer than three years of Item 20 outlet history and rarely enough SBA loans for a charge-off rate, so its grade rests on less evidence than an established system's. Read its Item 20 tables and talk to its first franchisees before relying on the grade. Other new franchisors
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: medium - issued 12 to 24 months ago; a newer filing is likely on file
Evidence: partial✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✗ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored7 of 7 headline figures on this page cite a page of the filing.
Overview
- Investment
- $211K – $288K
- 8th pct Service Resta…
- Avg gross sales
- $349K
- Company-owned only
- Royalty
- 6.0%
- 25th pct Service Resta…
- Units
- 81
- 30th pct Service Resta…
- SBA charge-off
- N/A
Quick verdict · Full-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Full-Service Restaurants median · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $211K – $288K including a $50K franchise fee, 6.0% ongoing royalty.
- RETURNSAverage unit revenue of $349K/year (median $323K) (company-owned outlets only - not franchisee performance).
- RISKVerdict B (Above average), verdict score 63/100 (higher is better).
- GROWTHFlat: no net change in franchised outlets in the latest year (0 opened, 0 closed) (Item 20).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- PP Franchise LLC
- CEO title
- CEO
- Morten Steen-Jorgensen
- Incorporated in
- TN
- HQ
- 3275 Newport Hwy Ste 5, Sevierville, TN 37876
- Auditor
- Smith, Buzzi & Associates, LLC.
- Audited financials
Overview
About
- CEO
- Morten Steen-Jorgensen
- Headquarters
- TN
- Founded
- 2025
- FDD year
- 2025
- States available
- 0
Can you afford it, and what does the money buy?
Entry cost runs 63% below the typical full-service restaurants franchise.
Source: FDD 2025 · Items 5–7
FDD Item 7 · 2025 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $50K | $50K |
| Working capital (3–6 mo) | $25K | $35K |
| Equipment, build-out, other | $136K | $203K |
| Total initial investment | $211K | $288K |
Source: Pepper Palace 2025 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $211K – $288K
- Top 40% of category vs category
- Liquid capital req'd
- $25K – $35K
- Top 40% of category vs category
- Franchise fee
- $50K – $50K
- Top 40% of category vs category
- Royalty
- 6.0%
- typical 6–8%
- Ad fund
- -n/d
- Total fee load
- 6.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 6.0% of gross sales |
| Technology fee | $400 |
| Transfer fee | $10K |
| Renewal fee | $5K |
| Inventory (initial) | $20K – $33K |
| Total fee load | 6.0% of rev |
A 6.0% total fee load is unusually lean. More of each revenue dollar stays with the franchisee.
What do units actually make?
Average unit sales run 78% below the full-service restaurants norm.
Company-owned outlets only - not franchisee performance
Source: FDD 2025 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for Pepper Palace until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for ad fund rate, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$280K
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own lease quote, labor market and build-out budget.
Returns model · single-unit ROIC
What would one Pepper Palace unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for ad fund rate, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for ad fund rate, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
Company-owned outlets only - not franchisee performance
- Avg gross sales
- $349K
- Per unit, per year
- Median gross sales
- $323K
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- gross revenue
- Sample size
- 81 outlets
- vs category median 18 · large
- Range (low → high)
- $157K→$915KCited, not corroborated — printed on page 43 of the 2025 FDD. Nothing else in our record independently restates or re-derives it.
- Cohort dispersion (min → max)
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 4 / 10
- vs category median 3 / 10 · above
Compared against 801 Full-Service Restaurants brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $349K/year in gross sales. Revenue-to-investment ratio: 1.4x. Company-owned outlets only - not franchisee performance.
Fee burden
Total ongoing fee load of 6.0% (near the Full-Service Restaurants median).
Disclosure
Transparency score 4/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Full-Service Restaurants medians
How Pepper Palace Compares
Category median of published Full-Service Restaurants brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 81
- Opened
- 0
- Last reporting year
- Closed
- 0
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- N/A
- Company-owned
- 81
- Corporate units in the system
- % franchised
- 0%
- vs corporate-owned
Last fiscal year · Item 20 exits and transfers
- Terminated
- 0
- Not renewed
- 0
- Transferred
- 0
- Reacquired
- 0
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
No SBA loan data available for this brand.
What could kill this investment?
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Pepper Palace presents elevated risk due to non-disclosure of profitability data, unclear franchisor financial health, small undocumented unit base, and inability to independently verify claimed $349k average revenue.
Why this reads harsher than the B grade: the grade weighs financial health, unit economics, unit growth, scale, legal, and transparency across the whole filing, while this summary lists individual flags without that weighting. The flags are worth checking with current owners; neither is investment advice.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Smith, Buzzi & Associates, LLC.
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Audited balance sheet only as of July 1, 2025 (inception); franchisor PP Franchise, LLC. formed May 2025 and not yet operating, so no income statement/revenue is presented. Total assets $100,000 (cash), total liabilities $0, members' equity $100,000.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
Score breakdown · what drove the 63 / 100 verdict
- 01MEDOnly 81 units system-wide suggests limited scale, unproven model, and higher failure risk vs. established chains
- 02MEDNet income not disclosed — franchisees cannot assess true earning potential after 6% royalties + operating costs
- 03MINORUnit growth trajectory unknown — cannot determine if system is expanding, stagnant, or contracting
- 04MEDHigh initial investment ($211k-$288k) relative to small system size and undisclosed profitability
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 6.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 10 years |
| Territory type | Exclusive territory |
| Protected territory | Yes |
| Exclusive territoryℹ | Yes |
| Territory radius | 3 mi |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 25 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | Yes |
| Arbitration location | Sevierville, TN (franchisor headquarters) |
| Jury trial waiver | Yes |
| Governing law | TN |
| Litigation count | 0 |
Items 10, 11
Training & Operations
- Classroom training
- 7 hrs
- On-the-job training
- 22 hrs
- Training location
- Affiliate location in Sevierville, Tennessee
- Ongoing training
- Required
- Field support
- 40 hrs/yr
- On-site visits per year
- Time to open
- 6 mo
- From signing to launch
- Site selection
- Franchisor provides criteria and must approve site
- Franchisor financing
- Not offered
- Item 10
- POS system
- Shopify POS
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Shopify POS
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Pepper Palace franchise?
The total investment to open a Pepper Palace franchise ranges from $211K – $288K, with an initial franchise fee of $50K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Pepper Palace franchise owners earn?
According to Item 19 of the Pepper Palace FDD, the average gross sales per unit is $349K. The median is $323K. Important context: Company-owned outlets only - not franchisee performance. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
Who owns Pepper Palace?
Pepper Palace is franchised by PP Franchise LLC. Source: FDD Item 1, 2025 filing.
What is Item 19 in the Pepper Palace FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Pepper Palace FDD and qualifies whose outlets they describe.
What is Pepper Palace's franchise failure rate?
SBA 7(a) loan charge-off data is not available for Pepper Palace (fewer than 10 loans on file). Charge-off rates are one way to gauge franchise risk, but not all franchise loans go through the SBA program. We recommend reviewing turnover and closure data in the FDD and speaking with current franchisees.
How many Pepper Palace franchise locations are there?
As of their most recent FDD filing, Pepper Palace has 81 total units in the United States.
Is Pepper Palace a good franchise to buy?
FranchiseVerdict rates Pepper Palace as a B-grade franchise with a verdict score of 63 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.