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DOMINO'S says only 21 of its 714 Australia and New Zealand stores were unprofitable in FY16 as it has hit back at allegations that it squeezes franchisees out of profitability, and underpays its workers.
Domino's (ASX:DMP) says the financial performance of its franchise network is strong, that it sets high ethical standards of its franchisees, and that it works closely with them on marketing, training, technology and administration support.
"87% of new store owners in this past year came from within the existing Domino's network, either existing franchisees or store managers which is strong endorsement of the franchise system," the company says in a statement to the ASX this morning.
The Brisbane-based company has been a star performer on the ASX over the past five years and has increased its share price from around $8 in early 2012 to a high of $80.69 per share in August last year. This morning, Domino's is trading down 4.93 per cent on Friday's close at $60.89 per share.
In FY16, the company reported revenue of $930.2 million (up 32.4 per cent on the previous year), and EBITDA of $180 million (up 40.9 per cent) across its entire business, which spans three continents, with a 10.9 per cent increase in same store sales.
The company says it has a zero tolerance approach to underpayment of workers. It has a compliance team that investigates franchisees for noncompliance with employment law, which works alongside Fair Work Australia.
In a statement, a FWA spokeswoman says the ombudsman has conducted a number of site visits at Domino's outlets across the country after commencing investigations into allegations of serious non-compliance commenced late last year. Further investigations will take months.
Domino's says, "There is no reason, no excuse, and no tolerance for any Domino's franchise that chooses not to pay its employees correctly or fails to meet expectations around ethics and governance."
"In the past three years, Domino's has removed four franchisees, operating seven stores, from our system for deliberately underpaying their employees."
It is understood that all five of the franchisees included in the media coverage had been identified by the company in the past for underpaying staff.
"Where Domino's has identified an employee has been underpaid, the Company's first priority is ensuring the employee is repaid correctly," says the company.
"Domino's has found no evidence of a link between franchisee profitability and breaches of employment obligations in this time."
It also says it has not received complaints about visa fraud, but will investigate an allegation made in the media today.
The company will report its half year results on Wednesday 15 February 2017.
Business News Australia
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