Comprehensive Report on the Issues Faced by Domino's Pizza Franchises

This report delves into the critical issues faced by Domino's Pizza franchises in Australia. It highlights the wage underpayment scandals, where franchisees are pressured to cut labor costs, leading to employee exploitation and high turnover. The report examines the autocratic ruling system imposed by the head office, which fails to provide adequate support to franchisees, particularly in managing rising ingredient costs and intense competition from rivals like Pizza Hut. The study reveals the ethical dilemmas faced by franchisees who struggle to balance financial viability with fair labor practices. It also discusses the impact of low pizza prices and the lack of empathy from the head office, emphasizing the need for effective leadership and strategic management to address these challenges and improve the company's reputation. The report uses various articles and interviews to support its findings, providing a comprehensive overview of the problems within the Domino's Pizza franchise network.

Running head: ISSUES FACED BY THE FRANCHISES OF DOMINOES PIZZA
ISSUES FACED BY THE FRANCHISES OF DOMINOES PIZZA
Name of the student:
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ISSUES FACED BY THE FRANCHISES OF DOMINOES PIZZA
Abstract:
‘Dominoes’ is one of the leading brands of pizza in Australia. It has developed a brand value
which had attracted the attention of pizza lovers form the age of 7 to the age of 70. They usually
work in network systems by providing more franchise in every regions of Australia. They
demand royalty form each store and this had been the main earning of the organization. It has
been found that the organization had been entangled in a number of different types of issues
which had shocked the entire business world. The employers sectors are neither compassionate
nor empathetic towards the different issues faced by the organization and deliver an autocratic
ruling system. The franchise owners had to underpay the workers by cutting their time in order to
meet the minimum required to run the stores. However, the head offices have turned deaf ears
towards this. Moreover the continuous decrease of price of the pizza is driving to the issue.
Moreover although price of the ingredients are rising, no help is being provided by the mother
organization. Moreover, competition of the other rival companies is creating stressful situations.
All these had been discussed in details with evidences in the report.

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Contents
Introduction:....................................................................................................................................3
Literature review:.............................................................................................................................3
Methods:..........................................................................................................................................4
Discussion:.......................................................................................................................................5
Conclusion:......................................................................................................................................6

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Introduction:
Dominoes Pizza enterprise is one of the largest pizza chain in the nation of Australia.
This is mainly in the terms of network store managers as well as network sales. It has been seen
that it has over 1900 stores all over Australia. They provide high quality pizza which does not
only have good taste but also ensures that they are made with the finest species and commodities
and ensures a hygienic system of preparation (The Times 2017). This organization mainly works
through the system of franchises where organization takes up a royalty form the stores; sales.
The franchises are given all the responsibilities to maintain the employees of the stores. However
recently, the organization has been in the issues of the scandal of low payment of the wages
resulting in huge turnover of the employees. These are affecting the franchise owners who are
having hard time mentally, financially and physically. The following report will mainly contain a
detailed discussion of the different issues faced by the different stakeholders of the organization
and how they are affecting each of them individually.
Literature review:
Dominoes Australia has been under recent scan of the media due to the reports of under wages
paid to the workers of the franchises of dominoes. Report of one of the store manager namely
Azrael Yin had come into news where he stated that it took him three years to gain courage to
inform head office that one of its biggest franchises are engaged in exploiting workers however
he got no response (The Times 2017). It was his boos namely Pamir Dehsabzi who stated that
labor cost should be kept low as 27 percent of sales to keep on with the work. For this, he had to
cut the number of hours every of the worker worked so that their pay gets reduced accordingly

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and the stores could be kept on going. This system often fluctuated with the rise and fall of sales
every week. Investigation done by Fairfax media stated there had been reports for wide spared
underpayment of wages (Couriermail.com.au, 2017). It also includes underpayment of different
penalties suing a delivery scam and also illegal sale of different sponsorships of migrants which
extended to up to $150,000. The franchise owners also had to face large number of issues
(Ferguson 2017). Often good franchise owners like Nirmal Patel had stated that he often has to
go through several stresses to make the ends meet which took a toll on him. He often felt that he
is cheating on the workers. He thought that he would stay in the business as long as he would
recover his losses but the system of the brand made him get into the system in a stressful way
(The Times 2017). There had been day when he had to himself deliver pizza in his care along
with his wife and children showing how worsening it was getting for him. Moreover the price of
the pizza is very low whereas the loss is incurred by the franchise as they the prices of the
ingredients grow up. For the franchise, it is observed that when labor, food or rent cot increases,
dominoes introduce a new fee or charge which has to be bore by franchises (Australia 2017).
Fourthly, it is also seen from Fairfax investigation that the business model of the Dominoes is
not on making profit from the franchise but making sales out of which they would take a
wholesome royalty form every sale. Moreover revitalizing their own brand by competitor Pizza
hut and their selling of half pried pizza in certain months also affected the sales of the franchise
also (Couriermail.com.au, 2017).
Methods:
Several recent articles have been studied in order to develop knowledge about the organization
trends that are followed in the marketing chains of dominoes. Not very good reviews are
obtained from the articles as mostly all were concerned with the underpayment of the workers.

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Different important dailies have also been studied thoroughly to determine the feelings of the
workers, the franchise owners and also of the employer. Various magazines have also been
studied as supportive evidences as it contained interviews of the workers and also of the
franchise owners which reflected the inside stories of the working places of the organization.
Discussion:
It has been seen that he organization is following an autocratic ruling system where they are just
placing the pressures on the franchise and the workers. An improper relationship handling is
occurring between the three levels of the organization like the employers and the head office, the
workers and the franchise (Sivaram and Turner 2016). They are not providing a proper strategic
plan for the franchise and the workers to follow and have no proper working principle (Ferguson
2017). As a result of these, no ropier bonding and organizational commitment is present among
the stakeholders. As a result of job dissatisfaction, huge turnover rates are noticed and as a result
franchise owners are facing huge issues. Also, franchise owners are also facing ethical dilemma.
When on one hand they have to cut down the payments of the workers to meet the basic level of
financial support to run the stores, they are morally being degraded themselves as they
themselves know that they are cheating the right of the workers (Reeve 2015). However they feel
helpless as they have to go on with the trend to keep with their business. Moreover the company
is not also empathetic to the others stakeholders and this is evident from the fact that the growing
price of the ingredients of the making of pizza is also compensated by the franchise owners
either form their own pocket or by cutting down wages where they get no help from employers
(Australia 2017). The organizations continuous introduction of new schemes of providing pizza
at very cheap rate had added to the ordeal. Moreover, the growing sale of the rival company of
pizza hut is yet another blow to the present condition. Hence effective leadership and strategic

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management are extremely necessary in this situation to develop the working environment of the
organizations and it franchises and thereby develops a proper reputation for the company (Bell et
al. 2013).
Conclusion:
Dominoes are one of the most loved pizza centers all over Australia and are a current favorite for
all age groups. They have a steady consumer base who wants uninterrupted delivery form the
stores. However, the working system of the pizza company is not at all in a proper shape due to
various internal conflicts among the various levels. While the workers are underpaid by the
franchise owners, they are themselves fighting to meet the minimum sales are required to keep
on with the business. No help is received by the franchise owners form the head offices and in
turn they completely deny of the so many critical issues occurring in the organization. Hence, a
very strong strategic management team is required in the organization that would help them to
overcome the stressful situations successfully.

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References:
Australia, B. 2017. The problems for workers during Australia's 'pizza wars' have been revealed.
[online] Business Insider. Available at: http://www.businessinsider.com/the-problems-for-
workers-during-australias-pizza-wars-have-been-revealed-2017-6?IR=T [Accessed 15 Sep.
2017].
Bell, D.E., Andrews, P. and Shelman, M., 2013. Dominos Pizza. Boston, MA, Estados Unidos:
Harvard Business School Publishing.
Couriermail.com.au. 2017. Domino’s chews up the dough. [online] Available at:
http://www.couriermail.com.au/news/queensland/dominos-dream-run-ends-with-854m-sliced-
off-its-value/news-story/97750436b83ac74deabf8112bff53086 [Accessed 15 Sep. 2017].
Ferguson, A. 2017. The Domino's Effect. [online] Sydney Morning Herald. Available at:
http://www.smh.com.au/interactive/2017/the-dominos-effect/ [Accessed 15 Sep. 2017].
Reeve, B., 2015. The Institutional Influences on Food Industry Self-Regulation-The Food
Pyramid Meets the Regulatory Pyramid: Responsive Regulation of Food Advertising to
Children.
Sivaraman, G. and Turner, P., 2016. The 7-Eleven wages scandal: The need for law
reform. Precedent (Sydney, NSW), (135), p.53.
Sutherland, C., 2013. Complexity and Simplicity in Australian Enterprise Agreements: Coding
Framework, List of Agreements and Chi Square Tables.

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The Times. 2017. $1b wiped off Domino's shares in minutes. [online] Available at:
http://www.victorharbortimes.com.au/story/4855535/1b-wiped-off-dominos-shares-in-minutes/?
cs=4182 [Accessed 15 Sep. 2017].