The Moscow Arbitration Court completely refused the former Domino’s Pizza franchisee Eugeniy Khoronko in a lawsuit against a network of pizzerias for compensation of 27 million rubles ($420 thousand). In addition, the court decided to satisfy Domino’s counterclaim against the franchisee for debt repayment and forfeit payment for a total amount of 2.2 million rubles ($34 thousand).
Eugeniy Khoronko opened a pizzeria of Domino’s Pizza network under a franchise agreement in Chelyabinsk in 2019.
The business plan for the Domino’s Pizza franchisee stipulated that the opening of one restaurant in the pizzeria chain in the region would cost 13 million rubles. with a payback period of 22 months.
However, the company each time increased the amount of capital costs. Eventually, for Khoronko it amounted to 20 million rubles. Moreover, every week he had to pay the brand owner 3.5% of royalties from revenue, 1% for advertising expenses, 2% for consulting services, and the same amount due to sales through the Internet and the network’s call center.
Shortly after the opening, due to non-payment of the resulting debts, Domino’s terminated the contract unilaterally. At the same time, the franchisee did not manage to make a profit from the enterprise, having incurred expenses of about 27 million rubles.
Eugeniy Khoronko said that he would appeal against such a court decision.