Multi-million-dollar franchisee Leroy Day runs seven Domino’s Pizza outlets and knows a thing or two about balancing a budget. Here he shares his tips for managing the financials.
After more than 13 years as a franchisee, Leroy Day is close to reaching his $15 million turnover target with his seven Domino’s Pizza outlets. “I go to work to make money, that’s my motivation,” he says.
In this interview, he also tells Inside Franchise Businesshow he manages to juggle the financial side of his enterprises.
How did you learn about formulating a business plan for your first franchise?
Domino’s provides intensive training for new franchisees to help them develop a business plan, as well as dedicated franchise consultants to provide ongoing support. My plan was pretty comprehensive. It was a three-year plan that included cashflows, a bank repayment schedule and a profit-and-loss statement.
What were the key financials you included in your first franchise?
Food, labour and – as pizza delivery experts – mileage were the three biggest costs I needed to factor when buying my first Domino’s store. Other costs like rent and electricity are also important.
Because my business plan was comprehensive, there were no unexpected costs. I did see an accountant for my first store to help me understand the benchmark disclosure figures compared with my own expectations. I also sought legal advice on the sub-franchise agreement so I could understand what I was signing, and what would happen in a worst-case scenario.
How do you make the reality of the numbers fit the goal?
It is important to access as much information and support available to you to help you achieve your goals.
When you buy a franchise today, what are the numbers you crunch?
If I were to buy another store today, I would be looking closely at the population, household count and demographic information of the region to see whether there would be demand, as well as rent costs for the site. These numbers are imperative to your venture’s success.
How do you verify the truth of the numbers presented to you?
I trust the numbers provided to me by Domino’s, but there are many ways you can verify figures yourself by looking at historical data and going to multiple sources. For example, you can access a lot of information online like demographic data from the Australian Bureau of Statistics and household counts from Australia Post.
Are there any financial figures a franchise buyer can afford to overlook?
No. If you are looking at buying a business, you need to keep your eyes open and cannot afford to overlook any figures.
How much do you rely on an accountant or bookkeeper?
I have a bookkeeper who handles the data entry, but I manage most of the day-to-day finances myself. We have daily profit-and-loss statements, so I can closely monitor sales and know exactly what is happening in each of my stores at the end of each day.
How can you avoid overspending when you buy your first franchise?
It can be hard to avoid overspending when you first buy a store as you are excited and want it to look shiny and new. You need to be disciplined, stick to your budget and seek information from your peers and other franchisees about how to keep down costs.
Obviously, less is best when it comes to leasing costs. This is tricky when buying an existing site that has a lease already in place, but I live by the mantra that if you don’t ask, you don’t get.
In most cases, you commit for five to 10 years, so it is important to negotiate and avoid signing a lease agreement that might be super cheap in the first year but really expensive by the 10th year.
What was the best financial advice you have been given?
My best advice is buy the most expensive, best-performing store you can. You have only one shot at buying your first store, so aim for one that has the best positive net cashflow.
Also, if you are a part of a great brand, you will have access to great franchisees who are willing to share their experiences. Learn as much as you can from those around you. That’s what we encourage at Domino’s.