Domino's Pizza Franchise Review - Information and Costs

Domino's Pizza franchise sign
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For decades, the quick-service delivery pizza market was dominated by a few major players. In this new millennium, however, that pizza oligarchy has been challenged by a number of young upstarts looking to capture their own slice of the market. The competition has come from all sides, through menus expanding to include salads and a generally broader variety of options, to brands that have tightened their focus on creating the best pizza pie they can make.

The market seemed to be dictating that the consumer either wanted everything, or they wanted the best thing.

Of the established brands, Domino’s may have made the most apparent change to adapt to the new market; they literally changed their name, dropping the “Pizza” in 2012 to simply be known now as “Domino’s.” The move was accompanied by a large national advertising campaign which claimed that since Domino’s had been offering more than pizza for quite some time, it just made sense to no longer limit themselves in their brand name. While the brand has continued to develop their menu, the vast majority of their offering still revolves around carbs, cheese and tomato sauce, whether that come in the form of a pizza, a sandwich, or a pasta bowl.

Domino’s has also begun further emphasizing their take-out business in their advertising and operations. Traditionally, quick-service pizza brands focused almost exclusively on delivery, and Domino’s was no different.

In the early 1970s, Domino’s came out with one of the indelible marketing campaigns of the last fifty years with their “30 Minutes or It's Free” guarantee, which has since been endlessly copied, parodied, and ultimately litigated over the past 40 years. However, in recent years, as competitors such as Little Caesar’s have increased their market share, Domino’s has made moves to position themselves as a leading take-out option in the industry.

The constant attempts to adapt to a changing marketplace have served Domino’s well, both historically and in recent years. While the “30 Minutes or It’s Free” delivery guarantee ultimately had to be discontinued due to multiple lawsuits claiming the delivery guarantee led to reckless driving by delivery drivers, it ultimately did have the effect of placing Domino’s into that hallowed pizza oligarchy over the last generation.

After a slow descent to a stock low point in 2009, Domino’s recent changes have helped it rise back to prominence, with a stock price increase of over 700 percent over the last half decade. Its most recent addition – the innovative “Pizza Car” that can carry 80 pizzas and has a 140-degree oven on board – has continued the company’s tradition of innovation. Domino’s continues to weather the storms that every established system has to face, and it continues to be proactive in protecting and building on its incredibly valuable brand. Entrepreneur magazine has consistently rated Domino's Pizza “the best franchise opportunity in the pizza category.”

The Domino's Franchise System

Domestically, Domino’s has almost 900 independent franchisees. They boast that more than 90% of those franchisees began their careers as hourly employees of Domino’s, rising from the ranks of drivers and pizza makers to being independent small business owners.

Overall, 97% of Domino’s locations are franchisee-owned.

Internationally, Domino’s operates in 73 countries, with locations in 5,700 cities worldwide. The company is expanding into emerging markets, including opening its first location in Thailand in 2013 and Kenya in 2014. The majority of Domino’s international expansion has been through Master Franchise agreements. In recent years these international rights have been consolidated within three companies, with Australian Domino’s Pizza Enterprises owning the master franchising rights to not only Australia and New Zealand, but also much of Europe.

The master rights to the UK and Ireland market, along with Switzerland, Liechtenstein, and Luxembourg, are owned by the British company Domino’s Pizza Group. The rights to India, which is Domino’s largest international market outside of the USA, along with Bangladesh, Nepal, and Sri Lanka, are owned by the Indian company Jubilant FoodWorks.

Domino's Franchise Information

Business Established: 1960

Initial Investment: $119,950 to $461,700

Liquid Cash Requirement: $75,000

Franchise Fee: $25,000

Royalty Fee: 5.5%

Ad Fund: 3%+

Pros

  • Special Incentive Programs - VetFran participant with hefty veterans discount, minority and women's programs available.
  • Recession Proof Market - Pizza-eating actually increases in recessive markets.
  • Established Branding - Domino's offers unsurpassed name recognition and national advertising support to boost local awareness.
  • Comprehensive Training Program - Covers store operations, marketing, finance, and human resources; 5-day franchise development program and 4-day Pizza Prep School.
  • Financing Available - Through Domino's designated lenders programs.

Cons

  • Outside Business Interests - Domino's does not allow the franchisee to have business interests outside the franchise location.
  • Ownership Structure - owners cannot slip below 51% ownership and must oversee store operations personally.