Domino’s Pizza settles dispute saga with UK franchise partners, at a price
The company said it will invest £20 million over the next three years, with franchise owners agreeing to increase the speed of new store openings.
Wrangling between the two sides stretches back over a number of years but chief executive Dominic Paul said the issue is now over and the deal is a “great resolution”.
Domino’s added that the UK business has struggled in comparison with the company’s global empire but the deal “can begin a new era of collaboration in which the system can realise its full potential”.
Under the deal, Domino's will spend £20m over three years for digital acceleration and in-store innovation to support franchisees in winning new customers.
There will be an increase in marketing spend and a new food rebate system to encourage order growth. Domino's will also improve its new store incentive schemes.
In return, franchisees have agreed to increase the number of new store openings to around 45 a year over the next three years and participate in national promotions.
Domino's relies heavily on promotions but these tend to be set locally by each franchise partner, making national deals difficult to launch.
Franchisees must also agree to prioritise, test, and roll out new technology and product innovation and to trial new store formats.
The deal will last for three years from January before being reviewed.
Russ Mould, director at investment group AJ Bell, said: “Domino’s has now struck a deal with these franchise partners which will see a not inconsiderable investment on its part, boosting marketing spend and improving the digital platform, and in return they will up the pace of openings and agree to participate in national promotions.
“The market likes the news as, at a stroke, it improves the growth trajectory of the business. However Domino’s relationship with its franchisees remains a vulnerability for the group which could rear its ugly head at the end of this three-year agreement.”
The two sides fell out while former chief executive David Wild was running the company. He stepped down in 2019, paving the way for new boss Paul - the former head of Costa Coffee - to take over the talks.
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