Franchising and Domino

PROJECT REPORT ON add CHAIN MANAGEMENT OF dominoS pizza pie pie SUBMITTED TOSUBMITTED BYDR. HAIDER ALI KUMAR SHANTANU ROLL NO. 22 1 MBA(E-BUSINESS) SEMESTER IV TABLE OF CONTENTS SL NO. 1. 2. 3. 4. 5. 6 7. PARTICULARS ABOUT eye maskS PIZZA dominoS IN INDIA scorecard IN eye maskS COMPETITIVE STRENGTHS OF DOMINOS BUSINESS strategy OF DOMINOS STORE trading operations SUPPLY CHAIN OF DOMINOS PAGE NO. 3 3 5 6 7 9 12 2 ABOUT DOMINOS PIZZAFounded in 1960, dominos pizza pie is the recognized world leader in pizza pie delivery run a ne cardinalrk of tot solelyyiance- possess and exemption-owned broths in the joined States and transnational food markets. half masks pizzas Vision illustrates a go with of exceptional people on a mission to be the best pizza pie Delivery troupe in the world. dominos started expose sm alone with the legendary Tom Monaghan who bought his first pizza line of descent and called it Dominicks. It was re-christened dominos Pizza in 1965. Ho ey e masksver, in 1978, the 200th half masks terminus undefendable, and things rightfully began to cook.By 1983 there Were 1000 dominos strains, rising to 5000 in 1989. right away, there ar to a greater extent than 9000 en certificationmentd and company owned submits in the coupled States and 60 planetary markets . half masks is listed on the NYSE low the symbol DPZ. The dominos Pizza steel was screamd a Mega instigant by Advertising Age magazine. eye masks Pizza was named Chain of the Year by Pizza Today magazine, the leading publication of the pizza industry. In 2009, half masks rank flake one in customer satisfaction in a survey of consumers of the U. S. argest limited serve up restaurants, according to the annual American node Satisfaction Index (ACSI). dominos has paded its poster significantly since 2008 to include Oven sunbaked Sandwiches and BreadBowl Pasta, and recently debuted its Inspired New Pizza- a permanent change to its vegetable marrow hand-t ossed product, reinvented from the crust up with new behave, cheese and garlic seasoned crust. DOMINOS IN INDIA disdainful Food Works restrict, a Jubilant Bhartia Group Company holds the Master Franchisee Rights for dominos Pizza for India, Nepal, Sri Lanka and Bangladesh.The company has been listed on the Indian btheses recently. Prior to Sep 24, 2009, the company was known as eye masks Pizza India Limited and underwent a name change, rest of the terms remaining the 3 equal. The producers of the company argon Mr. Shyam S Bhartia, Mr. Hari S Bhartia and Jubilant Enpro Private Ltd. half masks Pizza opened its first gillyflower in India in January 1996, at New Delhi. Today Dominos Pizza India has grown into a countrywide network of more than terce hundred livestocks with a group up of all over 9,000 people.According to the India Retail Report 2009, It was the hugest Pizza image in India and the fastest ontogenesis multinational fast feed drawstring betDominosen 2006 -2007 and 2008-2009 in terms of number of caudexs. Over the period since 1996, Dominos Pizza India has remained centered on delivering great tasting Pizzas and cases, superior step, exceptional customer dish out and value for gold ho employings. It has endeavored to establish a reputation for universe a home delivery specialist capable of delivering pizzas indoors 30 minutes or else FREE to a community of loyal consumers from all the bloods around the country.Dominos vision is cerebrate on Exceptional people on a mission to be the best pizza delivery company in the world . It is committed to bringing fun, happiness and convenience to lives of the consumers by delivering pleasant-tasting pizzas to their doorstep and social movements atomic number 18 aimed at fulfilling this commitment towards a salient and ever- enlarge customer metrical unit. Dominos constantly strives to modernize products that suit the tastes of the consumers and hence delighting them. Dominos call backs impregnablely in the strategy of Think global and act topical anaesthetic.Thus, time and again it has been innovating with palatable new products much(prenominal) as crusts, make passpings and flavthes suitable to the taste buds of Indian Consumers. merely providing value for money and cheap products to the consumers has been an important part of its efforts. Dominos initiatives such(prenominal) as Fun Meal and Pizza dementia put up been extremely popular with consumers looking for an affordable and value for money meal option. The Brand Positioning of Khushiyon ki domicile Delivery (Happiness Home delivered) is the emotional benefit it offers to the consumers.All the efforts, whether it is a new innovative and delicious product, offering consumers value for money deals, great service, country wide social movement or delivery in 30 minutes or release be all oriented towards delivering happiness to the homes of the consumers. Consumers can order their pizzas b y calling the single Happiness Hotline number 1800-111-123 (in some cities of Dominos Pizzas Presence) and 44448888 (in NCR, Mumbai and Bangalore). 4 MENU IN DOMINOS VEGETARIANSIMPLY VEG Margherita high mallow and Tomato pizza VEG I Double Cheese Margherita Fresh Veggie Country special Farm House VEG II Peppy Paneer Mexican Green curl up Deluxe Veggie Gthemet FEAST PIZZA Veg Extravaganza NON-VEGETARIAN SIMPLY NON VEG Cheese And Barbeque crybaby NON VEG I Barbeque complainer Spicy yellow NON VEG II Chicken Mexican chromatic Wave FEAST PIZZA Meatzaa Keema Do Pyaaza Non Veg Extravaganza Chicken Golden Cheese And Delight Pepperoni nerve ORDERS 5 VEGETARIAN Veg Mexican Wrap Veg Pasta Italiano White Veg Pasta Italiano Red Garlic Breadsticks Cheese Jalapeno Dip Cheese Dip Choco Lava streakNON-VEGETARIAN Veg Mexican Wrap Veg Pasta Italiano White Veg Pasta Italiano Red Chicken Wings COMPETITIVE STRENGTHS OF DOMINOS ? Strong and proven maturation and earnings baffle- Over a 50- yea r old history, it has certain a wayed growth and earnings model. This model is anchored by stong store-level scotchs, which grant an entrepreneurial incentive for license, and generate demand for new stores. The certify remains in return has produced strong and consistent earnings through and through render grasp and royalty payments revenue, with minimal touch ond capital expenditures. Strong store-level economics- It has true a cost- efficient store model, characterized by a delivery and carry-out oriented store design, with low capital requirements and a foc utilise menu of quality, affordable pizza and complimentary human face items. At the store level, it commits that simplicity and susceptibility of operations gives it rewards over its competitors. ? Strong and Overall-diversified immunity system- It has developed a large, global and diversified franchise network that is critical component of its system-wide triumph and efficient pizza delivery.The franchise system network consists of 8284 stores, 55% of which be located in get together States. 6 ? Strong cash lam and earnings stream- A substantial percentage of the earnings argon generated by the commited, owner-operator franchises through royalty payments and revenues to vertically integrated interpret drawing string system. ? Strong brand aw areness- Dominos pizza brand is one of the to the highest degree widely known consumer brand in the world. Consumers associate the brand with timely delivery of pizza, affordable pizza and complimentary aspect items. Dominos brand has been routinely recognized as a megabrand by Advertising Age. Internal pelf manufacturing and go forth concatenation system- In addition to generating significant revenues and earnings, the vertically integrated dough manufacturing and hand over chain system enhances the quality and consistency of the products and the relationship with the franchises. It excessively helps in leveraging economies of scal e to offer loDominosr cost to stores and allows the store dressrs to better focus on store operations and customer service by relieving them of the responsibility of mixing dough in the stores. BUSINESS dodging OF DOMINOSIt intends to achieve further growth and strengthen the hawkish position through the continued implementation of business strategy which includes the by-line elements? Continue to execute the mission statement- The mission statement of Dominos is exceptional franchises and team members on a mission to be the best pizza delivery company in the world. It implements this by pursual a business strategy that- puts franchises and company owned stores at the foundation of all the thinking and decisions emphasizes the ability to select,develop and retain exceptional team embers and franchises 7 provides a strong infrastructure to support the stores builds excellent store operations to create loyal customers ? Growing the leading position in an attractive industry - U. S. pizza delivery and carry-out are the largest components of the U. S. QSR pizza grade. They are as well as highly fragmented. Pizza delivery, through which a majority of sell gross revenue are generated, had sales of $10. 9 billion in the dozen months ended November 2008. As the leader in U. S. izza delivery, dominos believes that favorable store locations, simple direct model, widely-recognized brand and efficient lend chain system are competitive advantages that position it to capitalize on futurity growth. Carry-out had $13. 8 billion of sales in the twelve months ended November 2008. small-arm the primary focus is on pizza delivery, dominos is too favorably positioned as a leader in carry-out given the strong brand, convenient store locations and quality, affordable menu offerings. ? Leveraging the strong brand awareness - Dominos believes that he strength of the Dominos Pizza brand makes us one of the first choices of consumers seeking a convenient, quality an d affordable meal. Dominos intend to continue to call down the brand name and enhance the reputation as the leader in pizza delivery. In 2007 Dominos launched the campaign, You Got 30 Minutes, which make on the Companys 30-minute delivery heritage. In 2007 and 2008, each of the internal stores contributed 4% of their retail sales to the advertisement fund for national publicise in addition to contributions for market-level advertising.Additionally, for 2007 the municipal stores at heart active co-operatives elected to allot an additive 1% of their advertising contributions to support national advertising initiatives. Dominos intend to leverage the strong brand by go along to introduce innovative, consumer-tested and profitable new product varieties (such as Dominos Brooklyn Style Pizza and Dominos Oven Baked Sandwiches), complementary side items (such as buffalo wings, garish bread, Dominos cow Chicken Kickers and Cinna Stix) and value promotions as through trade affi liations with brands such as Coca- poop. Additionally, Dominos may from time-to-time partner with opposite organizations in an effort to promote the Dominos Pizza brand. Dominos believes these opportunities, when twin with the scale and share leadership, forget allow to grow the position in U. S. pizza delivery. ? Expand and optimize the house servant store go alongic - Dominos plan to continue expanding the base of house servant stores to take advantage of 8 the attractive growth opportunities in U. S. pizza delivery.Dominos believes that the scale allows to expand the store base with limited trade, distribution and other incremental infrastructure costs. Additionally, the franchise-oriented business model allows to expand the store base with limited capital expenditures and working capital requirements. period Dominos plan to expand the traditional house servant help help store base in the first place through opening new franchise stores, Dominos will similarly contin ually evaluate the mix of Company-owned and franchise stores and strategically film franchise stores and refranchise Company-owned stores. Continue to grow the multinational Business - Dominos believe that pizza has global appeal and that there is strong and growing supranational demand for delivered pizza. Dominos develop successfully built a broad international platform, al well-nigh maxly through the conquer franchise model, as evidenced by the 3,726 international stores in more than 60 countries. Dominos believes that Dominos continue to overhear significant semipermanent growth opportunities in international markets where Dominos adopt established a leading presence.In the current top ten international markets, Dominos believe that the store base in total for these ten markets is virtually half of the total long-term potential store base in those markets. Generally, Dominos believe Dominos will achieve long-term growth internationally as a result of the favorable stor e-level economics of the business model, the growing international demand for delivered pizza and the strong global recognition of the Dominos Pizza brand. The international stores boast produced positive quarterly same(p) store sales growth for 60 consecutive quarters. STORE OPERATIONSDominos believe that the focused and proven store model provides a significant competitive advantage relative to many of the competitors who focus on multiple components of the pizza category, particularly dine-in. Dominos have been focused on pizza delivery for 48 years. Because the interior(prenominal) stores and most of the international stores do non offer dine-in spheres, they typically do not require expensive real estate, are relatively small and are relatively inexpensive to build and equip. The stores also benefit from lower fear costs, as store assets have long lives and updates 9 re not frequently needful. The simple and efficient operational processes, which Dominos have refined thro ugh continuous improvement, include strategic store locations to palliate delivery service outturn-oriented store designs product and process innovations a focused menu efficient order winning, production and delivery Dominos rhythm point-of-sale system and a comprehensive store analyze political program. Strategic store locations to facilitate delivery service Dominos locate the stores strategically to facilitate timely delivery service to the customers.The majority of the domestic stores are located in populated areas in or adjacent to large or mid-size cities, or on or right college campuses. Dominos use geographic information software, which in incorporateds variables such as traffic volumes, competitor locations, household demographics and visibility, to evaluate and identify potential store locations and new markets. Production-oriented store designs The typical store is relatively small, occupying approximately 1,000 to 1,300 feather feet, and is intentional wi th a focus on efficient and timely production of consistently high quality pizza for delivery.The store layout has been refined over time to provide an efficient flow from order taking to delivery. The stores are primarily production facilities and, accordingly, do not typically have a dine-in area. Product and process innovations The 48 years of experience and innovative refinement have resulted in numerous new product and process developments that increase both quality and qualification. These include the efficient, vertically-integrated allow chain system, a sturdier corrugated pizza box and a mesh screen that helps cook pizza crust more evenly.The Dominos HeatWave blistering bag, which was introduced in 1998, keeps the pizzas hot during delivery. Dominos also continue to introduce new products such as Dominos Oven Baked Sandwiches, which Dominos launched in 2008. Additionally, Dominos have added a number of complementary side items to the menu such as buffalo wings, Dominos Buffalo Chicken Kickers, bread sticks, cheesy bread and Cinna Stix. Focused menu 10 Dominos maintain a focused menu that is intentional to present an attractive, quality offering to customers, term minimizing order errors, and expediting the order taking and aliment preparation processes.The basic menu has three choices for pizza products pizza type, pizza size and pizza toppings. Most of the stores carry two or three sizes of Traditional Hand-Tossed, Ultimate Deep Dish, Brooklyn Style and Crunchy Thin incrustation pizza. During 2008, Dominos added the new Dominos Oven Baked Sandwiches to the menu that are in stock(predicate) in fthe main varieties. The typical store also offers buffalo wings, Dominos Buffalo Chicken Kickers, bread sticks, cheesy bread, Cinna Stix and Coca-Cola soft drink products. Dominos also occasionally offer other products on a promotional basis.Dominos believe that the focused menu creates a strong identity among consumers, improves operating susceptibi lity and maintains forage quality and consistency. Efficient order taking, production and delivery for each one store executes an operational process that includes order taking, pizza preparation, cooking (via automated, conveyor-driven ovens), incase and delivery. The entire order taking and pizza production process is designed for completion in approximately 12-15 minutes. These operational processes are supplemented by an protracted employee pedagogy program designed to interpret world-class quality and customer service.It is the priority to ensure that every(prenominal) Dominos store operates in an efficient, consistent manner while maintaining the high standards of food quality and team member safety. Dominos PULSE point-of-sale system The computerized guidance information systems are designed to improve operating efficiencies, provide corporate management with timely rag to financial and marketing data and deoxidise store and corporate administrative time and expense . Dominos have interjected Dominos PULSE, the proprietary point-of-sale system, in every Company-owned store in the United States and significantly all of the domestic franchise stores.Some enhanced features of Dominos PULSE over the forward point-ofsale system include touch screen guild, which improves accuracy and facilitates more efficient order taking a delivery driver routing system, which improves delivery efficiency improved administrative and reporting capabilities, which enable store managers to better focus on store operations and customer satisfaction and enhanced online ordering capability, including Pizza Tracker which was introduced in 2007.Dominos require the domestic franchisees to install Dominos PULSE and are in the process of put in Dominos PULSE in the remaining domestic 11 franchise stores. Additionally, Dominos have installed Dominos PULSE in over 1,000 international franchise stores. Comprehensive store analyze program Dominos utilize a comprehensive store audit program to ensure that the stores are meeting both the pie-eyed standards as the expectations of the customers.The audit program focuses primarily on the quality of the pizza the store is producing, the customer service the store is providing and the condition of the store as viewed by the customer. Dominos believe that this store audit program is an implicit in(p) part of the strategy to maintain high standards in the stores. SUPPLY CHAIN OF DOMINOS Dominos operates in three business segments 12 domestic help stores- The domestic stores segment consists of the domestic franchise operations, which oversee the network of 4,558 franchise stores located in the conterminous United States, and the domestic Company-owned store operations, which operate the network of 489 Company-owned stores located in the contiguous United States Domestic supply chain- The domestic supply chain segment operates 17 regional dough manufacturing and food supply chain centers, one supply cha in center providing equipment and supplies to certain of the domestic and international stores and one vegetable processing supply chain center and International- The nternational segment oversees the network of 3,726 international franchise stores in more than 60 countries. The international segment also distributes food to a limited number of markets from six dough manufacturing and supply chain centers in Alaska, Hawaii and Canada (fthe). Domestic stores During 2008, the domestic stores segment accounted for $511. 6 one thousand million, or 36%, of the consolidated revenues. The domestic franchises are operated by entrepreneurs who own and operate an average of three to fthe stores. save six of the domestic franchisees operate more than 50 stores, including the largest domestic franchisee, which operates revenue stores. The principal sources of revenues from domestic store operations are Company-owned store sales and royalty payments based on retail sales by the franchisees. T he domestic network of Company-owned stores also plays an important strategic role in the preponderantly franchised operating structure.In addition to generating revenues and earnings, Dominos use the domestic Company-owned stores as test sites for new products and promotions as Overall as store operational improvements and as forums for training new store managers and prospective franchisees. Dominos also believe that the domestic Company-owned stores add to the economies of scale available for advertising, marketing and other costs that are primarily borne by the franchisees. While Dominos continue to be primarily a franchised business, Dominos continually evaluate the mix of domestic Company-owned and franchise stores in an effort to optimize the profitability.The domestic Company-owned store operations are dual-lane into eleven geographic areas located throughout the contiguous United States while the domestic franchise operations are divided into fthe regions. The team members within these areas provide direct supervision over the domestic Company-owned stores provide training, store operational audits and marketing services and provide financial analysis and store development services to the franchisees. Dominos maintain a reason relationship with the franchise stores through regional franchise teams, an array of computer-based training materials that help franchise stores comply 13 ith the standards and franchise advisory groups communication theory betDominosen us and the franchisees. Domestic supply chain that facilitate During 2008, the domestic supply chain segment accounted for $771. 1 million, or 54%, of the consolidated revenues. The domestic supply chain segment is comprised of dough manufacturing and supply chain centers that assembly fresh dough on a daily basis and purchase, receive, store and deliver quality pizza-related food products and complementary side items to all of the Company-owned stores and over 99% of the domestic franchise s tores. individualisticly regional dough manufacturing and supply chain center serves approximately 300 stores, generally located within a one-day delivery radius. Dominos regularly supply approximately 5,000 stores with various supplies and ingredients, of which, eight product groups account for over 90% of the volume. The domestic supply chain segment made approximately 575,000 full-service deliveries in 2008 or betDominosen two and three deliveries per store, per Dominosek and Dominos produced over 273 million pounds of dough during 2008.Dominos believe that the franchisees voluntarily choose to support food, supplies and equipment from us because Dominos provide the most efficient, convenient and cost- numberive alternative, while also providing both quality and consistency. In addition, the domestic supply chain segment offers a profitsharing arrangement to stores that purchase all of their food from the domestic dough manufacturing and supply chain centers. This profit-sharin g arrangement generally provides domestic Company-owned stores and participating franchisees with 50% of their regional supply chain centers pre-tax profits.Profits are shared with the franchisees based upon each franchisees purchases from the supply chain centers. Dominos believe these arrangements strengthen the ties with these franchisees. The information systems used by the domestic dough manufacturing and supply chain centers are an integral part of the quality service Dominos provide the stores. Dominos use routing strategies and software to optimize the daily delivery historys, which maximizes on-time deliveries. by dint of the strategic dough manufacturing and supply chain center locations and proven routing systems, Dominos achieved delivery accuracy rates of approximately 99% during 2008. The supply chain center drivers unload food and supplies and stock store shelves typically during non-peak store hthes, which minimizes disruptions in store operations. International Dur ing 2008, the international segment accounted for $142. 4 million, or 10%, of the consolidated revenues.Dominos have 592 franchise stores in Mexico, representing the largest presence of any QSR company in Mexico, 512 franchise stores in the United Kingdom, 412 franchise stores in Australia, 14 305 franchise stores in mho Korea, 296 franchise stores in Canada, 227 franchise stores in India and over 100 franchise stores in each of Japan, France, Taiwan and flop. The principal sources of revenues from the international operations are royalty payments generated by retail sales from franchise stores and sales of food and supplies to franchisees in certain markets.Dominos have grown by more than 1,200 international stores over the past five years. Dominos empower the managers and franchisees to adapt the standard operating model, within certain parameters, to gratify the local anaesthetic eating habits and consumer preferences of various regions outside the contiguous United States. C urrently, most of the international stores are operated under cover franchise promises, and Dominos plan to continue entering into master franchise agreements with qualified franchisees to expand the international operations in selected countries.Dominos believe that the international franchise stores appeal to potential franchisees because of the Overall-recognized brand name, the limited capital expenditures essential to open and operate the stores and the systems favorable store economics. The following table shows the store count as of December 28, 2008 in the top ten international markets, which account for 78% of the international stores.Number of stores Mexico 592 United Kingdom 512 Australia 412 South Korea 305 Canada 296 India 227 Japan 181 France 140 Taiwan 120 Turkey 106 The franchise program As of December 28, 2008, the 4,558 domestic franchise stores Were owned and operated by the 1,216 domestic franchisees. The success of the franchise formula, which enables franchi sees to benefit from the brand name with a relatively low initial capital investment, has attracted a large number of motivated entrepreneurs as franchisees.As of December 28, 2008, the average domestic franchisee operated approximately three to fthe stores and had been in the franchise system for tDominoslve years. At the same time, only six of the domestic franchisees operated more than 50 stores, including the largest domestic franchisee, which operates receipts stores. Domestic franchises 15 Dominos apply rigorous standards to prospective franchises. Dominos generally require prospective domestic franchises to manage a store for at least one year in the lead being granted a franchise.This enables us to observe the operational and financial performance of a potential franchisee prior to entering into a long-term contract. Dominos also generally restrict the ability of domestic franchisees to be cum involved in other businesses, which focuses the franchisees attention on operati ng their stores. As a result, the vast majority of the franchisees come from within the Dominos Pizza system. Dominos believe these standards are alone(p) to the franchise industry and result in qualified and focused franchisees operating their stores.Franchise agreements Dominos enter into franchise agreements with domestic franchisees under which the franchisee is granted the right to operate a store in a particular location for a term of ten years, with options to restore for an special term of ten years. Dominos before long have a franchise contract renewal rate of over 99%. nether the current standard franchise agreement, Dominos assign an exclusive area of primary responsibility to each franchise store.During the term of the franchise agreement, the franchisee is requisite to pay a 5. 5% royalty fee on sales, subject, in limited instances, to loDominosr rates based on area development agreements, sales initiatives and new store incentives. Dominos have the contractual rig ht, subject to state law, to terminate a franchise agreement for a variety of reasons, including, but not limited to, a franchisees failure to make postulate payments when due or failure to oblige to specified Company policies and standards.Franchise store development Dominos provide domestic franchisees with economic aid in selecting store sites and conforming the pose to the physical specifications required for a Dominos Pizza store. Each domestic franchisee selects the location and design for each store, subject to the approval, based on accessibility and visibility of the site and demographic factors, including population density and judge traffic levels. Dominos provide design plans and sell fixtures and equipment to most of the franchise stores. Franchise training nd support Training store managers and employees is a critical component of the success. Dominos require all domestic franchisees to complete initial and ongoing training programs provided by us. In addition, un der the standard domestic franchise agreement, domestic franchisees are required to implement training programs for their store employees. Dominos assist the 16 domestic and international franchisees by making training materials available to them for their use in training store managers and employees, including computer-based training materials, comprehensive operations manuals and franchise development classes.Dominos also maintain communications with the franchisees online, through various newsletters and through face-to-face meetings. Franchise operations Dominos enforce stringent standards over franchise operations to protect the Dominos Pizza brand. All franchisees are required to operate their stores in compliance with written policies, standards and specifications, which include matters such as menu items, ingredients, materials, supplies, services, furnishings, interior decoration and signs. Each franchisee has full discretion to determine the prices to be charged to custome rs.Dominos also provide ongoing support to the franchisees, including training, marketing assistance and consultation to franchisees who experience financial or operational difficulties. Dominos have established several advisory boards, through which franchisees contribute to developing systemwide initiatives. International franchises The vast majority of the markets outside of the contiguous United States are operated by master franchisees with franchise and distribution rights for entire regions or countries.In select regions or countries, Dominos franchise directly to individual store operators. The master franchise agreements generally grant the franchisee exclusive rights to develop or sub-franchise stores and the right to operate supply chain centers in a particular geographic area for a term of ten to tDominosnty years, with options to renew for additional terms. The agreements typically contain growth clauses requiring franchisees to open a tokenish number of stores within a specified period.Prospective master franchisees are required to possess or have access to local market knowledge required to establish and develop Dominos Pizza stores. The local market knowledge focuses on the ability to identify and access targeted real estate sites along with expertise in local customs, culture, consumer expression and laws. Dominos also seek candidates that have access to ample capital to meet their growth and development plans. The master franchisee is generally required to pay an initial, one-time franchise fee as Overall as an additional franchise fee upon the opening of each new store.In addition, the master franchisee is required to pay a continuing royalty fee as a percentage of retail sales, which varies among international markets. Marketing operations 17 The domestic stores generally contribute betDominosen 4% to 5% of their retail sales to fund national marketing and advertising campaigns. In addition to the required national advertising contributi ons, in those markets where Dominos have co-operative advertising programs, the domestic stores also generally contribute to market-level media campaigns.These national and market-level funds are administered by Dominos National Advertising Fund Inc. , or DNAF, the not-for-profit advertising subsidiary. The funds remitted to DNAF are used primarily to purchase video recording advertising, but also support market research, field communications, public relations, commercialised production, talent payments and other activities supporting the Dominos Pizza brand. DNAF also provides cost- effectual print materials to the domestic stores for use in local marketing that reinforce the national branding strategy.In addition to the national and market-level advertising contributions, domestic stores spend additional amounts on local store marketing, including targeted database mailings, intensity print mailings and community involvement through school and civic organizations. Additionally, Dominos may from time-to-time partner with other organizations in an effort to promote the Dominos Pizza brand. By communicating a popular brand nitty-gritty at the national, local market and store levels, Dominos create and reinforce a poDominosrful, consistent marketing message to consumers.This is evidenced by the successful previous marketing campaign with the guideword Get the Door. Its Dominos. and the current marketing campaign with the guide word You Got 30 Minutes. Over the past five years, Dominos sum up that domestic stores have invested approximately $1. 4 billion on national, local and co-operative advertising. Internationally, marketing efforts are primarily the responsibility of the franchisee in each local market. Dominos assist international franchisees ith their marketing efforts through marketing workshops and sharing of best practices and successful concepts. Third-party suppliers Dominos have retained active relationships of 15 years or more with more than half of the major suppliers. The suppliers are required to meet strict quality standards to ensure food safety. Dominos review and evaluate the suppliers quality government agency programs through, among other actions, onsite visits, third party audits and product evaluations to ensure compliance with the standards.Dominos believe that the length and quality of the relationships with suppliers provides us with priority service and quality products at competitive prices. Dominos believe that two factors have been critical to maintaining longlasting relationships and keeping the purchasing costs low. First, Dominos are one of the largest domestic volume purchasers of pizza-related products such as flthe, cheese, sauce and pizza boxes, which allows us to maximize leverage with the suppliers when items are put out for bid on a scheduled 18 asis. Second, Dominos use a combination of single-source and multi-source procurement strategies. Each supply category is evaluated along a nu mber of criteria including value of purchasing leverage, consistency of quality and reliability of supply to determine the appropriate number of suppliers. Dominos currently purchase the pizza cheese from a single supplier. In 2007, the Company entered into a new arrangement with this supplier.Under this arrangement, the supplier concord to provide an uninterrupted supply of cheese and the Company agreed to a five year pricing period during which it agreed to purchase all of its primary pizza cheese for the Companys United States stores from this supplier or, alternatively, pay to the supplier an amount reflecting any benefit previously veritable by the Company under the new pricing terms. The pricing schedule is directly correlated to the CME block cheddar price. The majority of the meat toppings come from a single supplier under a contract that began in July 2008 and expires in July 2010.The Crunchy Thin Crust dough is currently sourced by some other single supplier pursuant to requirements contracts that expire in 2009. Dominos have the right to terminate these arrangements for quality failures and for uncured breaches. Dominos believe that alternative suppliers for all of these ingredients are available, and all of the pizza boxes, sauces and other ingredients are sourced from various suppliers. While Dominos may father additional costs if Dominos are required to change any of the suppliers, Dominos do not believe that such additional costs would have a material adverse effect on the business.Dominos also entered into a multi-year agreement with Coca-Cola effective January 1, 2003 for the contiguous United States. The contract provides for Coca-Cola to be the exclusive beverage supplier and expires on the later of December 31, 2009 or such time as a minimum number of cases of Coca-Cola products are purchased by us. Dominos continually evaluate each supply category to determine the best sourcing strategy. It has not experienced any significant shortag es of supplies or any delays in receiving our food or beverage inventories, restaurant supplies or products.The current economic environment has created additional financial pressures for some of the suppliers however it does not currently anticipate disruptions in our supplies. Prices charged by suppliers are subject to fluctuation, and dominos has historically been able to pass increased costs and savings on to stores. It may periodically enter into financial instruments to manage the jeopardize from changes in commodity prices. Dominos does not engage in speculative transactions nor does it holds or issue financial instruments for trading purposes. 19