Domino’s Must Give Franchisees Choice
A federal district judge ruled that Domino’s Pizza Inc. franchisees have a choice of vendors for a computer system the company developed.
In his ruling Wednesday, Judge Richard H. Kyle, sitting in Minneapolis, said the chain’s franchise agreement allows franchisees to buy the hardware and software that would meet Domino’s specifications from any source.
After developing a computer system in-house, Domino’s mandated that the hardware be purchased from International Business Machines Corp. and the software from itself, the judge’s ruling said.
Some franchisees balked, contending that the only reason the company had imposed that requirement was to generate more franchisee revenue. The plaintiffs argued that they should be able to buy the system from any source as long as it met specifications.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
Ryan;
This is an important problem, which many franchisees face.
The POS system is ideally suited for obtaining market research, and while each individual franchisee has not enough data, the system does.
Dominos clearly wants to obtain this information and not share -otherwise they would pay for the introduction of the POS, and sell the information to the DFA.
This will be an interesting development to watch.