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Papa John's Won't Go Away Without A Fight

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Papa John's International Inc. said it will invest an additional $80 million in marketing and to provide financial assistance for its troubled domestic franchisees.

Under the agreement, the pizza chain's financial assistance to domestic franchisees will begin in the third quarter of fiscal 2019 and will end in 2020. The company will also make additional investments to promote its new brand ambassador, former basketball star Shaquille O'Neal.

Papa John's said it will extend financial assistance to its traditional domestic franchisees in the form of lower royalties, royalty-based service incentives, and targeted relief.

This program has the support of Papa John's elected Franchise Advisory Council or FAC.

"The strength of our brand and of our franchisees are both critical to Papa John's long-term success. We're pleased to announce that Papa John's will make a significant investment in the exciting future of our brand," said Steve Ritchie, President and CEO of Papa John's.

Since last year, Papa John's has been offering financial help to struggling franchises hurt by falling sales due to a PR crisis created by the pizza chain's founder as well as former CEO & Chairman John Schnatter.

Schnatter, who founded Papa John's 34 years ago, was ousted as chairman last summer following reports he had used a racial slur on a media training conference call. He filed several lawsuits against Papa John's in a bid to regain control of the company.

In March 2019, Papa John's reached a settlement agreement with Schnatter to resolve the ongoing dispute for control of the pizza chain. Schnatter has also reduced his stake in the company from 30 percent to 19 percent.

A month prior to that, Papa John's agreed to an investment of up to $250 million from Starboard Value LP, in return for a nearly 10 percent stake. The company also named the hedge fund's CEO Jeffrey Smith as its chairman.

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