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Domino’s U.K.’s long-running dispute with its franchisees is getting spicier, with 11 of the country’s most powerful store owners demanding that the pizza juggernaut pay back £2 million after franchisees took the hit on a spate of organised crime, according to the Sunday Times.
Accounting heavyweights KPMG audited Domino’s market and e-commerce funds at the request of the Domino’s Franchise Association (DFA), and found that a series of false transactions dating back to 2018 had cost the funds — for which store operators are fiscally responsible — around £2 million. This is just the latest conflict in a power struggle between Domino’s and its franchisees, which runs back to 2016-17. Under the terms of the company’s franchising, franchisees buy food and services from Domino’s, food and services which, like the rest of the restaurant industry, are subject to fluctuating costs, inflation, and a market which is currently best known for the “casual dining crunch” that destroyed Jamie Oliver’s restaurant empire and hammered groups across the city. As costs rise and sales flatten, profits fall — but the Domino’s model means that either the company or the franchisees can bear the burden, and up to now, the DFA feels it’s being asked to take on too much.
Its response has been brutal: refusing to open new restaurants and thereby halting the brand’s plans for world pizza domination; organising to push back against the company and replicating the USA Domino’s Franchisee Association’s structure; and most embarrassingly of all, boycotting the annual Domino’s Jamboree and forcing the company to cancel it outright. That might read less significant than refusing to generate money, but a franchise model’s success hinges on the promise of a fruitful, mutually beneficial relationship. It’s hurting the company’s bottom line: shares in Domino’s, are down by 8.5 percent since the start of 2020, even if it’s still valued at £1.4 billion.
More soon.