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Domino’s Franchise Costs $107K – $744K (+ 2024 Profits)

Domino’s Pizza, recognized as the world’s largest pizza company, embarked on its journey from a single store in 1960 to a global franchise powerhouse it is today. With its roots deeply planted in humble beginnings, Domino’s has evolved into a leading name in the pizza delivery industry, celebrated for its innovative approach and commitment to quality service.

The franchise is headquartered in Ann Arbor, Michigan, and initiated its franchising model in 1967, paving the way for its expansive growth. A significant aspect of Domino’s franchise system is its unique approach to franchising, primarily favoring internal candidates.

It’s notable that over 95% of Domino’s U.S. franchisees began their journey within the company, starting as part-time pizza makers or delivery drivers. This internal development model emphasizes the brand’s commitment to nurturing talent from within and ensuring that its franchise owners are deeply familiar with the company’s operations and values. 

a financial plan for a franchise
a financial plan for a franchise

Initial investment

Type of ExpenditureAmount
Initial Fee$0 to $10,000
Leasehold Improvements$25,000 to $350,000
Furniture, Fixtures and Equipment$81,000 to $145,000
Signage$5,200 to $35,000
3 Month’s Rent$3,000 to $25,000
Security Deposit$1,000 to $10,000
Opening Inventory and Supplies$2,750 to $6,500
Opening Advertising and Promotion$0 to $3,000
Training Expenses$1,000 to $4,000
Insurance$25,000 to $75,000
Miscellaneous Opening Costs$2,500 to $7,000
Additional Funds – 3 Months$10,000 to $73,000
Total$156,450 to $743,500

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Franchise fees & Royalties

Initial Franchise Fee

The Initial Franchise Fee can vary from $0 to $10,000 depending on the type of Domino’s Pizza Store being developed, purchased, or opened. This fee is payable prior to the issuance of the applicable agreement and is non-refundable.

Royalty Fee

Franchisees are required to pay a Royalty Fee of 5.5% of the store’s weekly Royalty Sales. Royalty Sales include the total receipts from all sales of pizza, beverages, and other products or services authorized for sale at the store or any approved off-site location.

Advertising Fund

An Advertising Fund Fee of 4% of the store’s weekly Royalty Sales is mandated for franchisees under the Franchise Agreement. This fee contributes to national advertising efforts.

Advertising Cooperatives

Franchisees may be required to participate in local and regional advertising cooperatives, contributing 1-4% of their Royalty Sales towards collective marketing efforts.

Connectivity Fee

A Connectivity Fee of $1,200 per year is applicable for stores without high-speed broadband connectivity where the service is available.

Transfer Fee

A Transfer Fee of $1,500 is applicable when the Franchise Agreement, the assets of the store, or any ownership interest is transferred.

Training Fees

A maximum training fee of $1,250 per session may be charged upon class registration. Additional or supplemental training programs may incur additional costs not to exceed $500, along with other expenses.

revenue

Revenue & Profits

a financial plan for a franchise
a financial plan for a franchise

Franchise pros and cons

There are several advantages and disadvantages of buying a Domino’s franchise and they include:

The Pros:

  • Pre-opening training and support: The franchisor has a comprehensive training program offered online or at the franchisor’s designated location to train its franchisees about the brand systems and growth strategies. In addition, it prepares them for a successful grand opening and offers them ongoing developmental support and education.
  • Flexible franchise options: The franchisor has a variety of flexible franchise designs to allow franchisees to make their choices and work with the available real estate opportunities. These include traditional stores, nontraditional stores, and transitional store designs.
  • Passive investment: The franchisor allows for semi-absentee ownership. Franchisees can operate the franchise alongside other business ventures.
  • Extensive advertising: To reach a wider geographical area, the franchisees can leverage worldwide brand popularity and extensive marketing and advertising systems such as national media, and loyalty program apps.
  • Technology advantage: Domino’s utilizes modern technology such as web-based reporting, labor management tools, online ordering, and a leading point-of-sale system to improve efficiencies and sales.
  • Third-party financing: The franchisor has relationships with financial service firms to offer its franchisees third-party financing to fund their startup and ongoing costs.
  • Site selection: The franchisor offers its franchisees site selection guidance to identify a suitable restaurant location.

The Cons:

  • No exclusive territory protection: The franchisor does not grant its franchisees the right to operate in a protected territory. Franchisees may face stiff competition from other Domino’s franchises, leading to reduced profitability.
  • Not a home-based opportunity: A Domino’s franchise cannot be operated from home or a vehicle. Franchisees need to have an established office space, which adds to costs and logistical procedures before opening.
  • Competition: The franchise faces competition from Papa John’s, Yum Brands, and Little Caesar Pizza.

How to open

1. Gain Experience within Domino’s

  • Start by working at Domino’s to understand the business operations. Domino’s prefers to grant franchises to those who have experience within their system.
  • Aim to have at least one year of managerial or supervisory experience at Domino’s, as this is a requirement for prospective franchisees in the U.S.

2. Explore Franchise Opportunities

  • Visit the official Domino’s franchising website to gather detailed information about the franchising opportunities available.
  • Understand the different types of stores (traditional vs. non-traditional) and decide which one aligns with your goals and financial capacity.

3. Complete Required Training

  • Enroll in and complete the Domino’s Franchise Management School if you are a current team member. This program is designed to prepare you for franchise ownership.
  • Ensure you complete all required training programs designated by Domino’s, which may include online courses or in-person training sessions.

4. Apply for Franchising

  • If you meet the internal criteria (i.e., you’re a current Domino’s team member with the necessary experience), initiate the application process by contacting Domino’s franchising department via the provided email or through their internal website.
  • For those not currently employed by Domino’s, it’s crucial to first secure a position that could lead to a managerial role to start the path towards franchise ownership.

5. Secure Financing

  • Review the estimated initial investment required, which can range significantly based on the type of store and location.
  • Domino’s does not provide direct or indirect financing, so consider external financing options such as loans or investments.

6. Select a Location

  • Work with Domino’s to identify and approve a suitable location for your franchise, adhering to their guidelines and market analysis.
  • Understand the territory rights, especially the “area of primary responsibility” if opening a traditional store, to avoid overlap with other franchises.

7. Set Up Your Store

  • Follow Domino’s guidelines for setting up your store, including leasehold improvements, furniture, fixtures, and equipment.
  • Ensure all products and services are in line with Domino’s standards and offerings, as you’ll be required to sell all products mandated by the franchisor.

8. Launch Your Store

  • Plan and execute an opening advertising and promotion strategy in coordination with Domino’s guidelines.
  • Begin operations with a focus on delivering high-quality products and services, leveraging Domino’s established brand reputation and operational model.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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