Domino's Master Franchise Model

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Case Details:

Case Code : OPER080
Case Length : 19 Pages
Period : 1983 - 2009
Organization : Domino's Pizza Inc.
Pub Date : 2009
Teaching Note :Not Available
Countries : US
Industry : Food and Beverage

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Domino's was started in 1960, and its first franchise store was opened in 1967. With rapid expansion, the number of stores reached 200 by the end of 1970s. Domino's began its foray into non-US markets in 1983, with a store in Canada. It then began expanding in the international markets, mainly through its Master Franchise model. Through this model, the franchisees were provided with exclusive rights to operate stores, or to sub-franchise them in a particular area. Domino's recruited franchisees with business experience and knowledge of local markets. Through its Master Franchise model, Domino's was able to reduce the risk associated with entering and operating in different international markets.

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This model also helped Domino's to localize its products to suit the needs of different markets.

The Master Franchise model proved to be highly successful as the master franchisees, with thorough knowledge of local markets, were able to establish the brand quickly in the international markets. By the end of 2008, Domino's was present in 60 countries across the world. International sales contributed significantly, accounting for 40% of global retail sales and 33% of operating profits of Domino's. During the quarter ending December 2008, the international operations of Domino's registered sixty consecutive quarters of positive same store sales (Refer to Exhibit I for selected financial data of Domino's).

Commenting about the Master Franchise model, David A. Brandon (Brandon), Chairman and CEO of Domino's, said, "We're in nearly 60 countries around the world. We operate using a Master Franchise model, which means that we partner with local operators in those various countries and provide them with the expertise, the brand, the operating platform, the oversight, and the support they need to combine with their capital and their operational execution to create results. And for that, they pay us a royalty of their sales...

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