By Mark Kalinowski
Published on June 18, 2019 at 12:00 AM
In our Domino’s (DPZ; Buy) report published yesterday (“DPZ: 2019 Franchise Disclosure Document Review for Domino’s”), we noted that “The Royalty Fee for a Domino’s U.S. franchisee is 5.5% of sales, and the Advertising Fund contribution for a Domino’s U.S. franchisee is 4% of sales.” We want to clarify that at present, Domino’s U.S. franchisees are funding the Domino’s National Advertising Fund (DNAF) at a rate of 6% of sales, as the other 2% that would typically go to the advertising cooperative under section 13.2 of Domino’s standard franchise agreement is instead being rolled up into DNAF (resulting in the 6% being paid to DNAF). So it’s a rate of 6% of sales for all franchisees, with the exception of incentives.
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By Mark Kalinowski
Published on June 17, 2019 at 12:00 AM
Not too long ago, Domino’s (DPZ; Buy) filed its 600+ page Franchise Disclosure Document (FDD) for 2019. In this report, we cite some of the highlights from that document following our review of it, including our review of it in comparison to last year’s Franchise Disclosure Document. For example, in 2018, the Advertising Fund spent $401,643,843. This was an +11.1% increase over what the Advertising Fund spend in 2017. On top of this, during 2018, the Advertising Fund spent 85.6% of this on Media Placement (or approximately $343,807,130), versus an 84.27% rate during 2017 (or approximately $304,044,399). In dollar terms, this was an increase of +13.1%. We maintain our Buy rating on DPZ and note the following:
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By Mark Kalinowski
Published on June 13, 2019 at 12:00 AM
Not too long ago, the Dunkin’ concept owned and franchised by Dunkin’ Brands Group (DNKN; Neutral) filed its 700+ page Franchise Disclosure Document (FDD) for 2019. In this report, we cite some of the highlights from that document following our review of it, including our review of it in comparison to last year’s Franchise Disclosure Document. For example, we note that the average cost of goods sold for a Dunkin’ unit in the continental U.S. for the 12 months ended October 31, 2018 was 26.9% of sales (please keep in mind that all Dunkin’ units are franchised). The average labor cost was 27.8% of sales. These figures were up year-over-year by ten basis points and 20 basis points, respectively. Also, the average freestanding Dunkin’ unit in the continental U.S. generated average sales of $1,299,700 (for the 12-month period ending October 27, 2018) for units with a drive-thru, and average sales of $1,032,159 (for the same time period) for units lacking a drive-thru. The year-ago averages from the 2018 FDD were $1,299,922 and $1,041,001, respectively. We maintain our Neutral rating on DNKN and note the following:
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