Domino's Pizza: Litigation & Risk
Quick-Service Restaurants · FDD Items 3, 4 & 5
Elevated Risk
7 cases disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 7
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 90 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 1,123
- Government-backed loans issued
- Charge-off rate
- 9.9%
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 82 loans
- Loans charged off or defaulted
- Total loan volume
- $409.5M
- Avg loan size
- $365K
- Participating lenders
- 200
FDD Items 5, 6 & 17: What You Give Up
Contract Risk Indicators
- Mandatory arbitration
- Not required
- You retain the right to sue in court
- Jury trial waiver
- Not waived
- Non-compete
- 1 yrs
- Post-termination restriction on similar businesses
- Franchisor can compete
- Yes
- Franchisor can open competing locations in or near your territory
- Right of first refusal
- Yes
- Franchisor can match any purchase offer when you try to sell
- Governing law
- Store state
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Pending: (1) State of Rhode Island Office of General Treasurer securities class action (Case No. 2:24-CV-12477) alleging false/misleading statements about global net store growth guidance; (2-6) Five derivative lawsuits (Ayers, Joshi, Kassner, Chu, Walker Derivative Lawsuits) alleging breaches of fiduciary duty and insider trading by directors/officers, stayed pending outcome of securities action; (7) several undisclosed labor and employment joint employer lawsuits. No concluded actions required disclosure.
What drove the 90/100 verdict
Risk Score Breakdown
- 01MINORSlow unit growth of only 2.9% YoY suggests market saturation or franchisee underperformance
- 02HIGHSignificant litigation including securities class action, derivative lawsuits, and joint employer claims creates legal/operational uncertainty
- 03MINORNet income margin of only 1.08% (14.7K on 1.37M revenue) indicates razor-thin profitability after royalties
- 04MINORHigh capital requirement ($107K-$743K) paired with low average net income creates extended ROI timeline
- 05HIGHJoint employer litigation could increase labor compliance costs and corporate liability exposure for franchisees
Severity inferred from FDD text. Not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice. Consult a franchise attorney before signing any franchise agreement.