What is the biggest advantage of opening a domino’s franchise

In the U.S., it’s almost impossible to not have heard of Domino’s. A staple of main streets and sports arenas alike, Domino’s has a wide reputation and a steady fan base across the country. If you’re curious about franchising, opening a Domino’s pizza franchise may be just the right endeavor.

In this guide, we’ll cover the details of opening a Domino’s franchise, including cost and fees, corporate support, framework and more. Having all of this information will help you make an informed decision on whether owning a Domino’s franchise is the right move for you.

What to know about the Domino’s franchise

As one of the largest pizza chains in the country, Domino’s started as a single pizza shop in Michigan in 1960. The chain quickly grew, and it’s now a worldwide brand, with over 17,000 franchise units in the U.S. and across six continents in 90 international markets.

Although Domino’s started as just pizza, they’ve branched out quite a lot into sides and appetizers, such as buffalo wings, breadsticks, desserts and more.

They’ve also integrated technology into their brand, enabling customers to easily order and then track their pizzas through the Domino’s app. They are often launching customer service initiatives, such as their new “Delivery Insurance,” which are popular with customers and add to creating a loyal customer base.

Many Domino’s franchisees own more than one Domino’s location — more than half, in fact. Domino’s very heavily favors internal candidates for opening up franchises, and generally puts more stringent requirements on external candidates. Additionally, franchise agreements last for 10 years.

One of the keys to finding the right restaurant franchise opportunity for you is understanding the corporate framework and expectations of a potential franchise. Be sure to learn as much as possible about this franchise — from costs to corporate support to your responsibilities — during the discovery phase, and be sure to read the franchise disclosure document carefully.

Does Domino’s make money?

Domino’s surpassed earnings expectations in 2019, with net sales of $1.15 billion, rising 6.3%. They also had a same-store sales growth of 3.4%, which indicates that many of their franchise locations are doing well. The number of Domino’s stores is growing, too — they added 141 net new restaurants in the fourth quarter of 2019 alone. Throughout 2019, their carry-out sales also grew almost 4%.

Types of Domino’s franchises

There are a few different types of Domino’s franchise stores that you can consider as you’re looking into Domino’s franchise opportunities. The type of store that you’d like to open will affect your initial investment and total cost as well its location.

  • Traditional store: These are retail outlets like the ones you are most used to — often in shopping centers or other retail hubs — that have ample parking for both customers and delivery drivers. They offer both in-store dining as well as carry-out and delivery.

  • Non-traditional store: These are the locations that you see within other, larger locations, such as those in malls, office buildings, stadiums and more. These often only offer carry-out, though some do have a few seats inside.

  • Transitional stores: These locations are located in smaller markets and have more scaled-back, customized menus to meet this smaller client base. They begin as carry-out-only stores, but may be transitioned to a traditional store once the market is proved out.

Training and education

Domino’s franchisees are required to complete a training course at Domino’s corporate headquarters: four days of Pizza Prep School as well as a Franchise Development Program that lasts five days. Franchisees will also undergo in-store training that will last from six to eight weeks.

The type and length of the training you will undergo depends on how much experience you have within Domino’s as a manager (including Domino’s Pizza High Performance University Crew and Manager Development Programs).

Domino’s franchise costs

How much is a Domino’s franchise? Costs come in a few different categories, including one-time, upfront costs as well as ongoing fees, such as the all-important franchise royalty fee. We’ll cover some of the major costs below, but keep in mind that these numbers reflect averages or estimates, and your area will have the most significant bearing on how much you’ll actually pay.

One-time costs

Initial investment: Initial investments will vary quite a bit based on your location and the type of Domino’s you want to open. On the low side, you can expect to invest around $145,000; on the high end, the total can climb above $500,000.

Initial franchising fee: The Domino’s initial franchise fee is $10,000 for building a new store or refranchising a closed store. Do note that Domino’s sometimes charges a “reservation fee” of $25,000. The franchise disclosure document that you receive will have more details on this additional fee.

Net worth: The current net-worth requirement is $250,000.

Cash liquidity: The liquid capital required is $75,000.

Ongoing fees

As with the vast majority of franchises, franchisees will be responsible for ongoing franchise fees. These include:

Royalty fee: The franchise royalty fee, which is the main source of revenue for franchisors, is about 5.5% of a store’s weekly gross sales.

Marketing and advertising fee: You can expect to pay around 3% to 4% of your store’s weekly gross sales for marketing and advertising supported by corporate, but this fee may be higher.

Be aware that fees don’t end here: You’ll have other various fees — such as real estate fees, inventory and supply chain and fixtures — that you’ll either have to pay once or as ongoing fees. Again, carefully review your franchise agreement for the most updated, accurate picture of fees and expectations.

Franchise financing

Many people who are looking to open a franchise location need franchise financing. This can cover both initial costs, such as the franchise fee and fixtures; real estate; and any other major costs.

Like many other franchises, Domino’s doesn’t offer direct or indirect financing for their franchisees, so you’ll have to look elsewhere if you need capital to open a Domino’s franchise. Third-party lenders are often a good option, since they provide loans including equipment financing, term loans, personal loans for business and more.

A strong financing profile, such as good credit and any other history in business, will help you secure a business loan. These credentials will also help determine how much capital you will receive.

Domino’s franchise pros and cons

As you’re considering the full picture of whether or not to open a Domino’s pizza franchise, you’ll want to consider both the advantages and disadvantages of franchising in general, as well as those specific to just the Domino’s brand. Let’s take a closer look.

Pros

  • Well-rated: Domino’s is often well-rated as a top pizza franchise to own.

  • Minority and veteran discount: Franchisees who are veterans, minorities and women might have opportunities to receive significant discounts on the initial franchise fee and opening costs. This is especially true for internal candidates with a year of management experience.

  • Opening cost: Compared to some other fast-food franchises, Domino’s franchise costs are on the low side.

Cons

  • Absentee ownership: If you’re looking for a franchise that’ll let you be offsite, you won’t be able to do so with a Domino’s franchise.

  • Internal candidates: Domino’s gives heavy preference to internal candidates, which can make requirements more stringent if you don’t come from within the Domino’s management ecosystem.

  • Territory: Domino’s does not offer territory protection, which shields franchisees from other approved franchise locations coming into their market.

The bottom line

If you’re looking to buy a franchise, there are a lot of pros to Domino’s franchises. As with any franchise, you’ll want to be sure that you request the full franchise disclosure document so you know exactly what’s expected of you from Domino’s’ corporate headquarters as well as the most current fees you are paying.

Also note that Domino’s gives very strong preference to internal candidates who want to open a franchise. If you’re very interested in a Domino’s franchise as an outside candidate, you might want to consider starting within the company as a worker and then applying for a franchise from there. It’s a good way, too, to find out what the day-to-day routine at a Domino’s is really like.

Either way, be sure to speak to as many current and former Domino’s franchisees as possible during your discovery process to get a firsthand look at what your experience will be like. If you ultimately find that Domino’s isn’t the right franchise for you, there are plenty of other food franchises to explore, as well.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

The Domino’s pizza franchise has been on a tear over the past decade. The company was a first mover in creating an online app where customers could track the progress of their pizza delivery. More recently Domino’s has added profitable menu items like oven-baked sandwiches to the menu along with chicken wings to create a more diverse offering.  

How much will it really cost to open a Domino’s? Expect to invest $200,000 – $461,450 to open this pizza franchise. You will also need at least $100,000 in liquid capital to get qualify. You will also need a net worth of $100,000 minimum. Take our franchise quiz to find out if Domino’s is the right choice for you. 

Now that we’ve covered the basics on what to expect, here’s a detailed rundown of the financial considerations for this franchise. 

Financial Requirements and Fees

You’ll need a liquid capital of $100,000, a net worth of $100,000, and the ability to pay the $25,000 franchise fee before opening a Domino’s. Many franchises offer discounts for their fees in certain situations and Domino’s is no exception. The company has a generous Veterans Program that helps these entrepreneurs get started. 

Fees/ ExpensesDollar Amount

Liquid Capital

$100,000

Net Worth

$100,000

Initial Franchise Fee

$25,000 

Initial Total Investment

~ $119,700 to $461,450

The initial total investment varies because there are a number of factors to take into account when opening a new location.

We broke down the requirements first in the spreadsheet below. Always note that these numbers do not always reflect the total cost, since there can be additional fees that are not included. 

Fees/ ExpensesDollar Amount

Additional Funds for 3 Months

~ $10,000 to $73,000

Franchise Fee

~ $25,000

Furniture, Fixtures, and Equipment

~ $62,000 to $145,000

Insurance

~ $9,000 to $40,000

Leasehold Improvements

~ $5,000 to $225,000 

Miscellaneous Grand Opening Costs

~ $2,500 to $7,000

Opening Advertising and Promotion 

~ $0 to $3,000

Opening Inventory and Supplies

~ $2,750 to $6,500 

Security Deposit

~ $1,000 to $10,000

Signage

~ $5,200 to $35,000

Three Month’s Worth of Rent

~ $3,000 to $25,000

Training Expenses

~ $1,000 to $3,000

Estimated Total Amount~ $119,700 to $461,450

As you probably noticed, there are huge variations in some of the expenses like the rent or security deposit. Dominos has rigid requirements when it comes to the building and location of their stores. The real estate prices in your region are a major factor influencing startup costs. 

Store criteria includes:

  • 3.75 acre of land

  • High visibility

  • A minimum of 15 parking spaces for customers and delivery vehicles

  • A pole sign or a dedicated pylon sign allotment

  • Pick-up winder (preferred)

  • 3,000 to 15,000 households in a 3-mile radius

  • An ADT (average daily traffic) of 20,000 (variable by market)

There are also building requirements to consider below:

  • 1,200 to 3,000 square feet

  • Electric: 3 phase, 400 amp service to main panel delivered (as required by code)

  • HVAC (heating, ventilation, and air conditioning): 1 ton per 150 square feet

  • Gas: 2 line/ 1.1 million BTUs (British thermal unit)

  • Water: 1” line (minimum)

  • High, open ceilings (preferred)

  • Large sign and illuminated awning (desirable)

  • Dedicated trash enclosure (desirable)

  • 20’ plus linear glass storefront

There are two types of stores you can own with Domino’s. The first is their traditional store, usually found in shopping centers and other plazas. These retail spaces require appropriate parking for customers.

Not Sure What Franchise to Start? Take Our 7-Minute Franchise Business Quiz!

Then there are non-traditional stores, which can be found in places like airports, stadiums, zoos, etc. Because of the flexibility of this pizza joint, store location is more flexible than other concepts.

Lastly, there are a number of expenses to consider once the store is opened and fully operational. Here are some of the on-going fees to consider before opening a franchise.

Fees/ ExpensesDollar Amount

Advertising Fund

4% of store’s weekly royalty sales

Carryout Tracker Bundle

~ $300

Connectivity Fee

~ $1,200 per year

Food Safety Audits

~ $190

Help Desk & Software Support Services

~ $45 per call

Mobile Inventory Device

~ $285

Royalty 

5.5% of store’s weekly royalty sales

Server Bundle

~ $3,300

Transfer

~ $1,500

This may look like a lot of fees, but this is pretty standard agreement when owning any franchise. Again, these numbers are not part of the initial total investment. These are monthly costs of doing business. 

At this point, you’re probably wondering now how much profit is going to be leftover after all the expenses. Next, we’ll evaluate total revenue, average sales of per unit, and how much a franchisee owner can expect to make.

Average Sales/ Revenue per Year

Systemwide Annual Sales/ Revenue

The systemwide annual sales/ revenue of Domino’s in 2019 was estimated to be about $14.3 billion an increase from their 2018 number of $9.8 billion. For their quarter 3 numbers in 2020, they were 21.5% over 2019 year’s quarter numbers. Despite the pandemic, they saw their numbers increase. They had excellent numbers due to their carryout services. 

Average Annual Sales per Unit

The average annual sales per store in a year is an estimated $42,120, while the average carryout sales per store a year is up to $81,640. There are two numbers because Domino’s treats the two differently. As you can see, a large number come from carryout as that is a big driver of their success.

Average Franchisee Profit 

The average franchise owner reports a salary or profit between $50,000 to $200,000. This is a difficult average to calculate because the numbers vary drastically.

There are too many factors to account for, one big factor being location. This is not the best number to use to determine whether or not the store is profitable. Rather, you can compare the franchise to other Domino’s that serve areas to your prospective region. Is your future store going to be operated in a big city? University town? Is it in a traditional or non-traditional site? All of these are major profitability factors. 

Other franchisees carry and operate their businesses much differently, so where they may be able to cut costs for profit, you will not be able to and vice versa. The cost of labor will also vary from state to state.

As a prospective franchisee, the better question to ask is “How much profit does a Domino’s franchise make?” Understanding this will allow you to better access the profits you might retain at the end of the year. 

Franchise Facts

  1. Dominos was founded in 1963

  2. Dominos began franchising in 1967 

  3. There is an estimated number of 17,020 units 

  4. Menu items consist of pizza, pasta, salads, chicken wings, and sandwiches

  5. They are part of the quick-service restaurant industry 

  6. Their headquarters is located in Ann Arbor, Michigan

How Much Profit Does a Domino’s Franchise Make Per Year?

The average Domino’s franchise owner reports a salary or profit of an estimated $107,00 to $116,00. These are pretty awesome numbers and many franchise owners end up being able to pay down loans and operate multiple franchises.

More than half of the franchise owners own more than one store. This means more money in your pocket that can eventually get you to a seven-figure income depending on how you manage your finances. If you are enthusiastic about these numbers then you should know that there are also many other advantages to being a franchise owner. Of course with the benefits, there are always challenges. Let’s talk about the advantages first.

Advantages of Domino’s

Besides the comfortable salary, franchise owners get benefits like a 401k and insurance, which is a great added benefit. They also get a 50% discount off the food from their own store. This way you can get your favorite pizza or wings at a fraction of the cost.

As for financing, taking a loan from a bank is easier as well with a franchise than opposed to starting your own business because there’s less risk with owning a franchise. The business model and operation plan has already been proven.

A comfortable salary with less risk than other franchise concepts is a big advantage. Specifically, when it comes to Dominos, you have the benefit of owning a popular and established brand. Because of this, marketing should be relatively easier and people will notice that a new Dominos just came into town. Without having to do much work, your Domino’s franchise is still set t do well since it has a good reputation among pizza lovers. 

Related Reading: How Much Does it Cost to Open a Little Caesars Franchise? 

The company also trains its new franchise owners and that training can range from a couple of weeks to around two months. They offer these training services via online or in-person depending on the circumstances. This support can be offered to anyone not familiar with owning or operating a Domino’s, making it accessible to outsiders, though many owners do have prior management experience. This is great for first-time owners who may struggle transitioning from employee to the owner of a pizza franchise.

Domino’s has also shown an ability to adapt and be innovative from a technology perspective over the past 10 years. They created an advanced pizza ordering app that allowed customers to track the progress of each delivery. Today, the company is testing self-driving pizza delivery cars. These are forward thinking projects you can’t get with other opportunities.

Of course, with every advantage/ benefits of running a  popular franchise, there are challenges that come with it. We talked about some of the strengths, so let’s talk about some of the challenges you may face.

Challenges of Domino’s 

Despite this being a well-known franchise, there are some challenges that come with its popularity. For starters, there is internal competition with the neighboring franchise owners. You have to find a way to stand out and either attract new customers, or impress the customers closest to the vicinity. In some highly-populated cities, there may be many Domino’s locations that you may need to compete with.

On top of that, there are also many other pizza chains that are growing and opening more locations. Along with fast-food options, more traditional pizza stores such as Italian-style pizza or deep-dish Chicago-style pizza are also growing in popularity. On top of that, if people don’t like the pizza or heard negative reviews, it may be difficult to stand out from the crowd or stay afloat when there are so many others around you.

Related Reading: How Much Will It Cost to Open a Pizza Hut?

Another challenge depends on whether you decide to open a traditional or nontraditional store. If you open in a nontraditional location like a concert arena or zoo, your franchise will be packed with people. Typically, Dominos handles their business through carry-out services, but in these nontraditional settings, they are operated in an in-person setting. Though this is relatively normal as other stores do in-person ordering often, Dominos is the opposite. Training an efficient staff and being comfortable in a fast-paced environment is essential. It is also important to note that in high-traffic areas, you may need to hire additional staff, which requires more wages as well as additional training. 

As you can see, there are a number of advantages and challenges, so it is ultimately up to you to measure your capabilities and understand if this is the type of franchise you want to own.

Is the Domino’s Franchise Right for You?

Those who wish to open a franchise need to complete a training course at their headquarters and training at a store. Many of their internal employees go on to become owners with such a streamlined process. With that said, the Domino’s franchise stresses experience and understanding of the operations of the store. This is a really good investment as the initial cost is relatively low when compared to other brands, though this is depending on certain circumstances. Ultimately, someone who wants to run this franchise should:

  • Be willing to work at a Dominos for experience or already have prior management experience 

  • Complete the training required from Dominos. This could be done online or in person depending on the situation. You may also be required to attend other training opportunities 

  • Be prepared to work in an environment whose services rely heavily on carryout orders as opposed to in-person sales

  • Be prepared for the high traffic and high volume of orders

Dominos is not like other stores where they operate mostly in person, but they receive many of their orders either through phone or online. This may require additional training, but is enticing to customers.

Though Domino’s is highly profitable and they offer many training opportunities to their franchise owners, this is best for someone who is comfortable working in an unconventional setting and has prior experience.

Fast food pizza is also extremely fast-paced, so you and your team need to work efficiently and well together. If you are willing to put in the work of gaining that experience and feel passionate about delivering excellent pizza and service, this franchise could be a good fit for you. 

Related Reading: What’s the Real Cost to Open a Dunkin’ Donuts Franchise?

Written by Jane