Franchising Status
Eligibility for SBA Loan

04/01/2020

Active

Domino's Pizza

Single Unit | Area Development

List of Franchisees as of 12/29/2019 | Financial Statements

Business Description

We are a Delaware limited liability company organized on March 2, 2007. Our principal business address is 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48105-9484. Our agents for service of process are disclosed in Exhibit A, as applicable. We are a direct wholly-owned subsidiary of Domino’s Pizza Master Issuer LLC, a Delaware limited liability company (“DPMI”). Its principal business address is 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48105-9484. We are an indirect wholly-owned subsidiary of Domino’s Pizza LLC (“DPL”), a Michigan limited liability company. Its principal business address is 30 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106-0997. DPL was the franchisor of Domino’s Pizza franchises before the closing of the 2007 Securitization Transaction described below. DPL is the indirect parent company of DPMI and an indirect wholly-owned subsidiary of Domino’s Pizza, Inc., a Delaware corporation (“Domino’s” or “DPI”). Domino’s is the parent company, directly or indirectly, of all Domino’s Pizza related entities. We and our affiliates are the successors to the business founded by Mr. Thomas S. Monaghan in 1963. In December 1998, Mr. Monaghan sold a substantial portion of his ownership interest in DPI, to investment funds affiliated with Bain Capital, LLC, a private equity firm based in Boston, Massachusetts and retired from the active management of the business. In July of 2004 Domino’s and certain of its shareholders sold shares in an initial public offering and since that date, Domino’s has been a publicly traded company.

Prior Experience

We or our predecessors or affiliates have operated Domino’s Pizza Traditional Stores since 1960 and Domino's Pizza Non-Traditional Stores since 1990 and Domino’s Pizza Transitional Stores since 2006. DPL commenced offering franchises for Domino’s Pizza Transitional Stores in February 2007. As of December 30, 2018, there were 5,904 Domino's Pizza Traditional Stores (390 company-owned and 5,514 franchisee-owned). There were 26 Domino's Pizza NonTraditional Stores, all of which are franchised. Additionally, there was 1 Domino's Pizza Transitional Store (franchisee-owned). DPL granted franchises for Domino's Pizza Traditional Stores since 1967 and granted franchises for Domino's Pizza Non-Traditional Stores since 1990. Company-owned stores are owned and operated by DPL. As of December 30, 2018, there were 2 facilities that operate under a License Agreement in the State of Pennsylvania. We do not plan to enter into these arrangements with any new licensees. The Store numbers reported in other public documents may be different than those set forth above due to different characterizations/definitions of a Store in the public documents. Neither we, nor any of our affiliates or predecessors have granted franchises in any other lines of business. Unless otherwise noted, the principal business address of our parents, affiliates and predecessors described above is or were 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48105 or 30 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106.

Business Offered

We are in the business of franchising Domino's Pizza Traditional Stores, Domino's Pizza Non-Traditional Stores and Domino's Pizza Transitional Stores. In certain of our branding campaigns, we may reference the brand as “Domino’s”. Domino's Pizza Traditional Stores are retail outlets located primarily in shopping centers, strip centers and similar retail locations with appropriate parking for delivery vehicles and customers of the store. Domino's Pizza Traditional Stores sell pizza and other authorized products through delivery and carry-out services. Domino’s Pizza Non-Traditional Stores sell pizza and other authorized products and services at non-traditional locations. These locations include retail locations in smaller markets, office buildings, shopping malls, stadiums, toll roads, airports, zoos, convenience stores and similar retail facilities. Domino's Pizza Non-Traditional Stores will ordinarily offer only carry-out service but may have sit-down facilities depending on the location. In addition, we offer a nontraditional store which will only offer carry-out service and which may be a pre-fabricated structure. Domino’s Pizza Transitional Stores sell pizza and other authorized products from a variety of locations, which are generally smaller in size than Domino’s Pizza Traditional Stores. The menu for Domino’s Pizza Transitional Stores will be customized to fit the location. Domino’s Pizza Transitional Stores are located in select markets that have fewer potential customers than Domino’s Pizza Traditional Stores. Domino’s Pizza Transitional Stores generally offer carry-out service only as of the date of the opening of the Store (although some Transitional Stores may open offering partial delivery service during certain hours of operation) and as market conditions materialize, the delivery service will be expanded to the point where full delivery service is offered. At that time the franchisee has an opportunity to convert the Transitional Store to a Domino’s Pizza Traditional Store at the same location or such other location as we approve. The franchisee may also have to relocate the Store if we require. We have also issued licenses to large public entertainment or similar facility operators, like stadiums or their concessionaires, as well as convenience store operators, to sell approved products for a license fee based on facility sales. We do not intend to grant additional licenses in the future but will consider entering into new licenses with existing operators when the terms of their licenses expire. The licensee can sell pizza and other authorized products for carry-out service at the facility. We may grant licensees the right to operate multiple facilities at locations to be agreed upon by the parties. Domino's Pizza Traditional Stores, Domino's Pizza Non-Traditional Stores, and Domino’s Pizza Transitional Stores (collectively referred to as "Store" or "Stores" unless otherwise stated) operate under a unique system which includes special recipes and menu items; distinctive design and furnishings; standards and operating procedures; quality control procedures; training and advertising programs (the "System" or "Domino’s Pizza System"). These Stores are also identified with certain trade names, service marks, trademarks, logos and emblems, including, the mark "Domino's Pizza" and other names and marks which we designate (the "Marks"). If you are acquiring a Domino's Pizza Traditional Store or a Domino's Pizza NonTraditional Store selling pizza and other authorized products through delivery and/or carry-out service, you will sign our Traditional Store Franchise Agreement attached as Exhibit E ("Standard Franchise Agreement") or our Non-Traditional Store Franchise Agreement attached as Exhibit F ("Non-Traditional Store Franchise Agreement"), as applicable. If you are acquiring a Domino’s Pizza Transitional Store offering carry-out service and, if applicable, partial delivery service, you will sign our Domino’s Pizza Transitional Store Franchise Agreement attached as Exhibit G (“Transitional Store Franchise Agreement”). Unless otherwise stated, the Standard Franchise Agreement, Non-Traditional Franchise Agreement and Transitional Store Franchise Agreement are collectively referred to as “Franchise Agreement”. If you are acquiring a license to sell certain authorized products from a public entertainment or similar facility, we will grant you a license under our License Agreement attached as Exhibit I (the “License Agreement”). Domino’s Pizza International, Inc. (“DPII”), the international franchisor of Domino’s Pizza franchises prior to the 2007 Securitization Transaction, franchised Domino’s Pizza stores in Alaska and Hawaii prior to the closing of the 2007 Securitization Transaction. DPF has franchised Domino’s Pizza stores in Alaska and Hawaii following the closing of the 2007 Securitization Transaction. Franchisees in Alaska and Hawaii have in the past signed a modified form of the franchise agreement to reflect the operation of Stores in those particular markets. Domino’s is now requiring that new and renewing franchisees in those states as well as franchisees acquiring a new franchise on transfer sign the form of franchisee agreement contained in Exhibit E. In appropriate circumstances, we may give you the right to open a limited number of Domino's Pizza Stores within a development area under our Development Agreement attached as Exhibit H ("Development Agreement"). You must sign our then current form of Franchise Agreement for Domino's Pizza Stores you open within your development area. We may also offer development agreements for Domino's Pizza Non-Traditional Stores or Domino's Pizza Transitional Stores. We have developed a design concept for our Stores called the “Pizza Theater.” Under the “Pizza Theater” design concept, customers are able to view the preparation of their pizzas and other menu items they order to enhance their experience at our Stores. U.S. franchisees are required to reimage their Stores to the “Pizza Theater” design concept. The reimaging of the U.S. Stores began in 2014 and is expected to be completed by 2019. The pace at which Stores are required to reimage depends on such factors as the number of Stores a franchisee owns and operates, and in the case of single Store franchisees, the profitability of the Store. In some cases, existing franchisees are required to reimage their Stores within 6 months of notification from us that their Stores are required to reimage. We offer limited-time incentives for certain franchisees to relocate to increase the performance of their Stores, as well as increased incentives and discounts for certain other franchisees who want to take advantage of the “Pizza Theater” design concept. We expect the average reimage to cost approximately $50,000, and depending on local regulations, to take place without closing the Store. All new U.S. Stores must be developed utilizing the “Pizza Theater” design concept.

Initial Fees

Depending upon the type of Store to be developed, purchased or opened and whether you are participating in one of our incentive programs as discussed below and in Item 6, you will pay an initial franchise application processing fee ("Initial Fee") ranging from $0 to $10,000. The range of the Initial Fees paid to us during the year ending December 31, 2017, was from $0 to $10,000. Our current policy for determining the amount of the Initial Fee is (subject to the terms of an incentive program): (1) If you are constructing a Store you will pay an Initial Fee of up to $10,000. (2) If you are refranchising a closed Store you will pay an Initial Fee of up to $10,000. (3) If you are purchasing an existing Store you will pay a transfer fee of $1,500. (4) The fee for a Development Agreement is each Store’s Initial Fee of up to $25,000 (“Reservation Fee”). The Reservation Fee for each Store is payable only if you fail to comply with the development schedule for a Store. Further, in the event that you do not open all of your required new Stores under the Development Agreement, you must pay us the Reservation Fee for each of the new Stores not opened. All such payments of the Reservation Fee will be due within twenty (20) days of written notice from us. (5) If you are applying to enter into a facility under the License Agreement, you will pay an Initial Fee of up to $5,000. (6) We may oversee the construction of a Store on your behalf under our “DPZ Builds” program. Under this program, you will be required to sign our form of Project Management Services Agreement attached as Exhibit T. In such event, you will pay to us a fee in the amount of $25,000, which includes the payment of the Initial Fee. We may waive a portion of this fee under certain incentive programs. The Initial Fee is payable prior to us issuing the applicable agreement and is not refundable for any reason. Also, at our discretion, all or a portion of the fees described in (1), (2) and (3) above may be required to be paid when the initial franchise application is submitted for our review and approval. Additionally, at our discretion, this fee may be applied to the initial operational and classroom training of the individual who will own 51% or more of the equity and voting interest in the franchise. We may charge a reasonable training fee up to $1,000 for these training programs or classes which you must complete to our satisfaction. We may waive all or a portion of the Initial Fee under incentive programs we implement from time to time to encourage system growth. If you are developing a store under our new Store build incentive program, you must pay us a reservation fee of $25,000 under certain circumstances. The reservation fee when paid is not refundable. Our store incentive programs are described in more detail in Item 6. You must purchase inventory and supplies, equipment, fixtures, furnishings and signage to open your Store. DPD and approved vendors supply these items to franchisees. We estimate that these payments together with Initial Fee payments will range from $84,750 to $167,500 for a Domino's Pizza Traditional Store, $65,750 to $158,500 for a Domino’s Pizza Non-Traditional Store and $78,500 to $162,500 for a Domino’s Pizza Transitional Store, based upon the experience with store openings during the last year. See Item 7 for our current estimate of these costs. You must also make certain payments to DPD when you acquire the proprietary computer and point of sale system. See Items 6, 7 and 11.

Financing

We do not offer direct or indirect financing. We do not guarantee your note, lease or obligation.

Franchisee Revenue and Profit

Set forth below is information concerning the average weekly unit sales and other financial data of Domino's Pizza Traditional Stores, Domino's Pizza Non-Traditional Stores and Domino's Pizza Transitional Stores operated in the Continental United States for the years noted. You should take this information into consideration only if you are acquiring a franchise for a Store now located or to be located in the Continental United States. AVERAGE WEEKLY UNIT SALES AND OTHER FINANCIAL DATA OF STORES AWUS The AWUS of franchised and company-owned Stores for the past 5 calendar years is set forth below. These Stores include Domino's Pizza Traditional Stores, Domino's Pizza Non-Traditional Stores and Domino's Pizza Transitional Stores. AWUS means the average weekly unit sales (i.e., average weekly Royalty Sales). AWUS is calculated by dividing the total Royalty Sales reported by all Stores operating during the year by the number of weeks reported. OTHER FINANCIAL DATA Set forth below are calculations of EBITDA as a percentage of Royalty Sales and other financial indicators based upon AWUS of <$10,000, $10,001 - $15,000, $15,001 - $20,000, $20,001 - $25,000 and $25,000+. These pro forma statements have been derived from profit and loss statements submitted by franchised stores in operation as of the end of calendar year 2017. 325 Stores which did not submit profit and loss statements or whose profit and loss statements were considered incomplete or not properly prepared were excluded from these calculations. Some Stores have achieved these sales or earned these amounts. Your individual results may differ. There is no assurance that you will achieve these sales or earn as much. We or our affiliates also may furnish supplemental data concerning specific proposed store locations or Delivery Service Areas (“DSA”) that are prepared using a siting model program known as “Domino’s Strategic Integrated Mapping and Modeling System”. We or our affiliates may also furnish supplemental data concerning specific proposed store locations in connection with the proposal by existing Domino’s Pizza franchisees to open an additional store in a DSA in which such franchisee has an existing store (a “Store Split”) or to open one or more additional stores in contiguous DSAs in which such franchisee has existing stores and to redraw the boundaries of the DSAs (“Store Realignment”). If data generated by the Siting Model is furnished to you, you will be provided with a Supplemental Financial Performance Representation explaining the Siting Model in greater detail and the way in which the information differs from the information contained in this disclosure concerning average weekly unit sales and other financial data of Domino’s Pizza stores. Except for the information set forth above and data to substantiate and support the information set forth above, we do not furnish or authorize our salespersons or sales agents to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a Domino's Pizza Traditional Store, Domino's Non-Traditional Store or Domino's Pizza Transitional Stores. Actual results may vary from store to store, and we cannot estimate the results of any particular franchise.