How to buy a Domino’s franchise in Australia
A business loan can finance up to 60% of your total investment in Domino's.
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Domino's is Australia's largest pizza chain in terms of both sales and number of stores Australia-wide. It is also an internationally acclaimed franchise, spanning over 9 countries and with over 2,450 stores across the globe.
If you're thinking of purchasing your own Domino's store, you can learn about the application process and how to finance your purchase below.
What is a Domino's franchisee?
A Domino's franchisee is someone who owns and runs a Domino's store as their own business. Your business, their branding. Franchisee's pay 7% of their profits in royalties to the Domino's brand and up to 6% of their profits towards national advertising.
Franchisees can choose to run their Domino's business alone or as a partnership. While there are no strict limits on how many partners can be involved in the running of the business, Domino's may reject applications with too many partners based on the financial viability of the partnership structure. Domino's also requires their franchisees to have full commitment to the business venture, so no other directorships are permitted.
Once you're the owner of a Domino's store, you can choose to sell at any time.
How do I apply to become a Domino's franchisee?
The process of becoming a Domino's franchisee involves several stages, which include:
- Enquiry stage. You must submit an online application, known as an "expression of interest form" through the Domino's website.
- Application review. You will be provided with an application document pack by Domino's.
- Phone meeting. You will have a call with a Franchise Recruitment Officer.
- Face-to-face meeting. You will have a meeting with a Franchise Development Manager in which you will be required to submit a draft business plan. In this meeting you will discuss site-selection and be given store-specific data.
- Orientation assessment. You are required to attend a 2-day orientation assessment at a franchised store in your area.
Successful applicants will then begin the franchising process, in which you confirm financing arrangements, cash flow projection, store location and the franchise agreement. You are also required to do 12 weeks of intensive training, provided by Domino's.
How much does it cost to buy a Domino's store?
Buying a Domino's store can vary in cost based on the size and location of the store and the level of the equipment used. A new Domino's store usually costs between $450,000 - $600,000 + GST, and there is an initial franchise fee of $60,000 + GST.
You must organise financing yourself from a bank or other lender. Lenders usually finance up to 60% of the total investment. This means that you must provide an investment of 40% in cash and/or available equity. This is a minimum of $250,000 + GST.
Franchisees will also be required to pay ongoing costs:
- 7% of gross sales in royalties.
- Maximum of 6% towards national advertising.
- Staff wages.
- Other costs applicable to your circumstances, such as loan repayments.
How do I finance a Domino's franchise?
There are multiple ways of getting a business loan to finance a Domino's franchise. Domino's does offer to put you in touch with banks that they have relationships with, but you can also consider the following:
- Unsecured business loan. An unsecured business loan might be the way to go if you don't have (or don't wish to use) an asset, such as property, as security for your loan. Unsecured business loans are only available up to $500,000.
- Secured business loan. If you're a homeowner or own assets that equate to the value of your loan, you can use them as security on a business loan. Secured business loans may have lower rates than unsecured loans, as the loan provider can take ownership of your security to cover the loan cost should you default on the loan, making them less risky.
- Business line of credit. A business line of credit loan differs from other types of finance in that you have access to a revolving line of credit available to use as and when you need. Line of credit loans have the benefit of being more flexible than other loans, and they generally only charge you on what you borrow. They are available up to $1,000,000 in both secured and unsecured forms.
Make sure that you compare your franchise finance options carefully before submitting an application for business finance. Once you have found the loan that's right for you, click the "Go to Site" button to start an application.
How to get approved as a franchisee for Domino's
Domino's has several rigid requirements for aspiring franchisees. You must:
- Have no other businesses. Domino's requires full-time commitment to their brand from franchisees, and owners cannot have any other form of employment or self-managed investment.
- Be an Australian permanent resident. All Domino's investors, and investors' spouses, are required to be permanent Australian residents.
- Provide funds for their own due diligence. For new stores, an initial cost of $60,000 is required, as well as their document and legal preparation fees.
What are the benefits of becoming a Domino's franchisee?
Becoming a Domino's franchisee can carry many benefits. Domino's provides extensive comprehensive training to their franchisees on the running of a successful business, as well as ongoing support in marketing. Domino's will also coordinate the set-up of the store from site approval to supplying and fitting the specified products and equipment.
While any new business carries financial risks, becoming a franchisee could arguably be considered less risky, as you'll be using the internationally well-established Domino's branding and marketing. It may also be cheaper than setting up a food business yourself from scratch.
How much money can I make?
Like other franchises, Domino's does not disclose the amount of money that its franchisees can expect to make, as there are many factors to running a business that can affect profit margins.
At stage 4 of the application process, Domino's will disclose store-specific financial data to you, where you can see how much other Domino's stores make, to get more of an idea of your expected income as a franchisee.
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