Explanation

This risk was not identified. The FDD's Item 20 tables show a very low rate of franchisee terminations, cessations, and non-renewals over the past three years, indicating a stable franchise system. High turnover can be a red flag for systemic issues, such as a lack of profitability or poor franchisor support, but that does not appear to be the case here.

Potential Mitigations

• It is still valuable to speak with current and former franchisees from the lists in Item 20 to confirm their satisfaction with the system.
• An accountant can help you analyze the Item 20 turnover data over multiple years to confirm stability.
• Your business advisor can help you compare these turnover rates to industry averages to confirm they are favorable.

Explanation

This risk was not identified. Item 20 data reflects a pattern of steady, manageable growth for a mature system of this size, rather than excessively rapid expansion. Uncontrolled growth can sometimes strain a franchisor's ability to provide adequate support, but Domino's mature and extensive system appears well-equipped to handle its current growth rate.

Potential Mitigations

• Confirm with existing franchisees that the quality of franchisor support has remained consistent during the system's growth.
• Your business advisor can help you assess if the franchisor's support infrastructure seems adequate for its size and scale.
• Discuss the franchisor's future development plans with them to understand their strategy for continued growth and support.

Explanation

This risk is not present. As disclosed in Item 1, Domino's is a very mature and globally recognized brand with a history of franchising that dates back to 1967. The risks associated with an unproven concept, inexperienced management, or undeveloped support systems are not applicable here.

Potential Mitigations

• Even in mature systems, speaking with franchisees about recent changes or initiatives is a valuable part of due diligence.
• Your business advisor can help you analyze how the brand has adapted over time to maintain its market position.
• Review the business experience of current key executives in Item 2 with your attorney.

Explanation

This risk was not identified. Pizza is a staple of the food service industry with a long history of sustained consumer demand. Domino's is a well-established market leader, not a business based on a new or fleeting trend. The risk of the entire business concept becoming obsolete in the short term is extremely low.

Potential Mitigations

• A business advisor can still help you research local market competition and demand for pizza delivery in your specific area.
• Review the franchisor's recent product innovations in Item 1 to assess their ability to adapt to changing consumer tastes.
• Your financial advisor can help you analyze long-term consumer trends in the quick-service restaurant industry.

Explanation

This risk was not identified. Item 2 of the FDD details the business experience of the key executives. The management team consists of individuals with many years of experience within the Domino's system or other large, relevant corporations. The risks associated with an inexperienced leadership team are not present here.

Potential Mitigations

• Reviewing the backgrounds of the management team listed in Item 2 is always a prudent step for any franchise investment.
• When speaking with franchisees, ask about their confidence in the current leadership team and the strategic direction of the company.
• A business advisor can help you research the public reputation and track record of the company's senior executives.

Explanation

This risk is not currently present. Item 1 indicates that while Domino's Pizza, Inc. was previously owned by a private equity firm, it has been a publicly traded company since 2004. Therefore, the specific risks often associated with short-term profit motives of private equity ownership are not directly applicable.

Potential Mitigations

• An accountant can help you review the company's public filings (10-K, 10-Q) to understand its current ownership structure and financial priorities.
• A business advisor can help assess the potential impact of decisions driven by shareholder value on franchisees.
• Your franchise attorney can explain the rights and obligations of a franchisee within a publicly traded system.

Explanation

This risk was not identified. The FDD provides extensive disclosure of its complex corporate structure in Item 1. Furthermore, DPF provides audited financial statements for both itself and its key parent and service provider (DPL) in the exhibits, ensuring a high degree of financial transparency.

Potential Mitigations

• It is crucial to have your accountant and attorney review the financials and structure of all disclosed parent entities.
• Understanding the roles and interdependencies of each corporate entity is vital for a comprehensive risk assessment.
• Your attorney can help clarify which entity is responsible for specific obligations under the franchise agreement.

Explanation

This risk was not identified. The FDD provides a clear history of the business from its founding through its various ownership structures. There is no indication of undisclosed predecessors or attempts to obscure a problematic history.

Potential Mitigations

• It is always good practice to ask long-tenured franchisees about their experiences under any previous ownership structures.
• An attorney can review the historical disclosures in Items 1, 3, and 4 for any potential red flags.
• A business advisor can help you research the company's public history for additional context.