Domino's responds to disgruntled franchisee's allegations

The pizza chain denied being engaged in misleading and deceptive behaviour.

Domino’s has responded to a disgruntled franchisee’s allegations, confirming that it expects to be served with Federal Court proceedings “shortly”.

“We refer you to our previous public announcements on our efforts to improve the standards of our franchisee network, a program that started two years ago. We have shared that these efforts would likely lead to some franchisees being unhappy with DPE and choosing to leave the network,” Domino’s said in a statement sent to the ASX.

“We also flagged some of those franchisees may choose, as an attempt to achieve leverage to bargain with us, to take legal action or to raise the threat of litigation through the media. This is one such case in our view. Therefore, we are disappointed, but not surprised, by this action by an Australian franchisee which we do not consider represents the relationship with our wider franchisee community.”

The Courier Mail earlier reported that Frederick Aloysius Mario White had alleged that earnings at his three Perth Domino's stores shrank after Domino's failed to mention plans to force franchisees to sell pizzas below cost at $5 in 2014 and forcing him to buy ingredients at "unreasonably high" marked-up price of about 18%.

Domino’s flatly denied White’s claims.

“The matter relates to a commercial dispute between DPE and the franchisee which has been the subject of discussions with the franchisee for some time. While DPE is disappointed that the franchisee has chosen this path of litigation, from the information available to it, DPE considers the franchisee’s claims to be without merit, and in fairness to our investors and franchisee network it is important that we defend the claims,” the chain said.

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