Domino's also sought to calm investors at its results update, revealing it has returned A$4.5m in unpaid wages to staff over the last three years following internal audits.
In a statement to the ASX, Domino's chief executive Don Meij again hit back at claims the franchise business model relied on underpayment of wages, saying it had "zero tolerance" for unethical behaviour, including underpayment of wages or under-reporting of sales.
"I make no apologies for expecting the highest standards from our franchisees," Meij said. "We work collaboratively with the Fair Work Ombudsman, and our compliance program has been independently audited by Ernst & Young and, as a result, we are confident that our compliance program is industry-leading.
"Due to our investment in proactive compliance we have identified some franchisees who have wilfully breached their obligations to their team members."
Domino's said over the past three years, it had conducted 456 store spot checks, completed 102 store audits via a third-party audit process, with 42 ongoing, and investigated 88 individual complaints, with 25 ongoing.
It said that process had recovered a total of A$4.5m in unpaid superannuation and wages owed to team members by franchisees, representing 0.8 per cent of the labour costs in the franchise network for the period.
"I would prefer all of our franchisees lived up to our expected standards, and I am disappointed some individuals have tried to take advantage of our business, and team members. But I am proud that our proactive team has uncovered this wrongdoing and corrected it.
"Our priority is to ensure team members receive their correct entitlements, and our efforts to prevent, identify and address any breaches of this expectation are unrelenting."
Domino's said it had removed four franchisees operating seven stores for wilful breaches of their employment obligations. It said a further 22 franchisees chose to leave after IR compliance audits.
"Our franchisee profitability figures clearly show there is no reason, nor excuse, for this behaviour," Meij said. "The findings from our compliance program demonstrate no correlation between store profitability and underpayment of wages."
Meij said the result had been boosted by a strong performance in Australia and New Zealand, as well as support for its recently upgraded menu.
"Ultimately this is our core business - high quality food at an affordable price," Meij said.
"The Taste the Colour launch in September powered the highest same store growth in the company's history in October... augmented by increased volumes across a higher number of organic store openings than in any other first half," he said.
"We have opened 27 new stores this financial year and are set to open an additional 35 new stores before July 2."
Meij said the focus on digital innovation, easy payment solutions and investment in premium ingredients had increased sales.
The company upgraded its earning before tax, depreciation and amortisation (EBITDA) and profit after tax growth to be in the region of 32.5 per cent for the full year.
The Domino's New Zealand business successfully trialled its first pizza delivery by drone last year, and was continuing to trial the delivery method with Meij saying innovation was key for the business.
"Our focus on innovation is always with our customers as our first priority," Meij said.
"We continuously work on streamlining the order experience and ceaselessly conduct testing to ensure this is as smooth as possible," he said.
"Our investment in technology is also helping our store managers and franchisees become more efficient and productive."
The Group operates in seven markets including Belgium, France, the Netherlands, Japan and Germany as well as Australia and New Zealand.
The company said it planned to open between 175 and 195 new stores this year across the group.
Domino's will pay an interim dividend of 48.4c in March, up 39.5 per cent on the previous period.
- With News.com.au
