Domino’s chairman Stephen Hemsley is enjoying a second slice of franchising

After fulfilling his mother's wish and becoming a chartered accountant, Stephen Hemsley went on to become chief executive of Domino's Pizza. He is now on an acquistion spree with latest venture, Franchise Brands

Domino's chairman Stephen Hemsley is enjoying a second slice of franchising

The news that Stephen Hemsley had been appointed chief executive of Domino’s Pizza in 2001 received a mixed response from his nearest and dearest. Whilst his three kids reckoned it was “the coolest job”, his mother was horrified. “She said, ‘What are you doing darling? Running a pizza company? You’re a chartered accountant.'”

Hemsley’s sterling financial background certainly stood him in good stead when it came to taking the reins at Domino’s. Trained as a chartered accountant, his first job was at professional services firm Stoy Haywood, now known as BDO. While the auditing side of the job bored him rigid, he enjoyed conducting due diligence on companies that were about to float on the stock market.

He went on to take a job in New York with Saracens, a small investment bank, and after a year wound up at investment titan 3i. “Working for a private Swiss bank, investing a tiny proportion of the funds they had under management, wasn’t that thrilling,” explains Hemsley, from the boardroom of his Knightsbridge house. “I wanted someone with deeper pockets and 3i certainly fitted the bill.”

His time at 3i was a steep learning curve – it was a chance for him and his peer group to apply all the theory they’d learned up until this point. “It taught us how to negotiate. We were young guys in our mid-20s negotiating with these crusty old businessmen in order to invest in their companies, so you needed to be taught how to do that,” he says. “Quite a few people teach you how to sell but not many actually teach you how to negotiate.”

Hemsley flourished at 3i and became investment director before being reposted in Jersey. He and his family loved the island lifestyle and when his three years were up, he was told he’d be working in Guildford, Surrey. “‘That’s not very thrilling,’ I thought.”

After being back in the UK just a few weeks, he accepted a partnership at a chartered accountancy firm in Jersey and shipped the family back to the Channel Islands – he and wife Sherron had three children by this point. But, unfortunately, the quality of the new job didn’t match the quality of the lifestyle. “Sadly, I realised why I’d left the profession ten or 12 years before that. I hated it.”

Once he’d served a year, the family moved back to the UK for good. As he contemplated his next move, the chief executive of a company Hemsley had invested in during his time at 3i got in touch. “I’d done quite a number of stock market flotations on the junior markets whilst I was at 3i and the company wanted to float on the AIM market, which was just being launched at that time.”

He became financial director of Meltech, which “repaired the bits that go into computers”, for three years. “Then I had a difference of opinion with the chairman about the direction of travel and we decided to part ways.”

But all was not what it seemed. “The chief exec turned out to be a crook; the company went into receivership and he did a runner back to Australia.” The receivers called Hemsley and revealed that as the biggest shareholders they could double their investment and prop up the business or walk away and lose everything they’d put in so far. “We bought it, completing the deal at the beginning of September 2008.”

“We battened down the hatches to get through the recession,” says Hemsley. “We knew that we weren’t really going to be selling many new franchises because the banks were out of business for two or three years. It was a case of hanging on to what you’ve got, supporting the franchisees to get through some fairly difficult times and then having another look to see what we’ve got in a couple of years’ time.”

It’s an approach that’s served him well: both businesses continued to be profitable throughout the downturn and generated “a reasonable amount” of cash, which was repaid to shareholders. Then, a couple of years ago, both brands begun aggressively expanding again. ChipsAway and Ovenclean now have around 350 franchisees apiece.

Hemsley and Wray are looking further afield for opportunities too. They are aiming to spend around £10m bringing some new franchises under the Franchise Brands banner in the next year. “They will have reached critical mass, so maybe they’ll have 25-plus franchises, but they probably won’t be making much money for their existing owners,” says Hemsley. He says the expertise and central services that Franchise Brands can offer franchises entering the fold include marketing, financial and legal expertise.

While not perusing the franchise world looking for acquisition targets, Hemsley can either be found in his study working on the family’s property interests or, more likely, on his classic boat, which he raced in the Mediterranean last year. He and wife Sherron also travel a lot, taking at least one ‘adventure’ holiday a year – they’ll shortly be off hunting Komodo Dragons in Indonesia.

One place you’re unlikely to find Hemsley, if he can help it, is the boardroom. “It’s not my favourite place. I’m more of a doer than a talker, really. I’m far happier being out with the franchisees or in the stores than I am sitting in the boardroom talking about corporate governance.”

Hannah Prevett
Hannah Prevett