Domino’s Pizza Group Surges Most Ever on Franchisee Resolution

(Bloomberg) -- Shares in Domino’s Pizza Group Plc jumped the most on record after the British pizza delivery firm reached a resolution with its franchisees, ending a commercial dispute that has lasted for several years. 

The deal with the Domino’s Franchisee Association will initially run for three years and includes 20 million pounds ($27 million) of investment from the company, according to a statement Thursday. The stock surged as much as 31%, the most since listing in London in November 1999. 

“This is a positive development,” Goodbody analyst Paul Ruddy wrote in a note to clients. “The franchisee agreement removes a considerable obstacle to achieving its top-line growth aspirations.”

Some franchisees said rising food and business costs weren’t being shared equitably by the company, the Sunday Times reported in July 2018. They wrote to the Domino’s board threatening to “declare war” if they weren’t given a bigger share of company profits, the newspaper said in a follow-up article in December.

Under the resolution announced Thursday, Domino’s has committed to increase marketing and provide an enhanced food rebate mechanism for franchisees. In return, franchisees have agreed to new store openings and will participate in new national promotional deals. 

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