Domino’s Pizza has reached an agreement to end a long-running dispute with its franchisees causing shares to skyrocket.
Under the deal the company will invest £20m over three years, increase marketing spend and improve incentive schemes for new store openings. In return, franchisees will agree to participate in national promotions, open 45 new stores and test new products Domino’s revealed in a statement published today.
Share price is up 27 per cent on the back of the agreement with Domino’s also revealing it expects profit to be in line with expectations for the full year.
Dominic Paul, the chief executive for Domino’s said the company had reached “truly a great resolution” with its franchisees.
“I firmly believe that the resolution we have reached is a good one for franchisees, our people, and our shareholders. It means that our interests are aligned, and we are now in an even stronger position to execute our strategic plan. Our franchisees are truly world-class, and we are looking forward to accelerating our growth together,” said Paul.
“The resolution we are announcing today can unleash the power of the Domino’s brand, and enable us to deliver long-term, sustainable growth which will benefit all our stakeholders,” he continued, adding that the popular pizza delivery company plans to grow its delivery and collection services.
Mark Millar, the chairman of Domino’s franchisee association, said: “this framework for growth is the result of many months of discussions, and the DFA and its members are pleased to have reached an agreement that brings Domino’s and its franchisees closer together and enables us to focus on a future that delivers growth for all.”
Domino’s also took the opportunity to announce that medium-term expectations have increased to the upper end of the previously announced targets of £1.6bn – £1.9bn for system sales.