The next year, while honoring his commitments to his creditors, Tom managed to make
$50,000 in net profits. Unfortunately, his profits were short-lived. A devastating
fire wiped out his anchor store, and the insurance covered only $13,000 of the $150,000
in damages. Domino's almost went under. But Tom buckled down, cut back wherever
he could, and devised ways to cover the fire losses. Once again, Tom went back to
making pizza.
On April 1, 1967, the first Domino's franchise opened. Tom's lawyer cautioned him
to expand slowly and focus more on managing the business. Tom had no patience for
legal details and focused on what he did best, growing the business. Tom continued
to drive as hard as ever.
His efforts paid off and a year and a half later, Domino's had risen again. Domino's
had grown to a dozen pizzerias, with a dozen more in development. Tom found himself
being asked to speak at luncheons about his business success. Domino's was maturing
as an organization, and talk of going public was in the air. Tom was having the
time of his life. Nearly a decade of working sixteen to eighteen-hour days, seven
days a week, was finally paying off.
His success seemed too good to be true, and it was. Within eighteen months, Tom
was out of cash and Domino's was in financial trouble. Checks were bouncing left
and right, and his accounting firm quit because Domino's couldn't pay for the service.
Without financial statements, Tom had no idea how much he owed; he had trouble believing
the $1.5 million figure he saw in the books.
He was on the verge of bankruptcy
again. "We had over expanded and added
new stores to territories before the first stores were fully established," Tom explained.
"We also made the mistake of sending in untrained managers with no experience to
run the new stores and over staffed our home office."
The business community that had praised him only a few months before now treated
him like the town idiot. Desperate to save Domino's, Tom began searching for a merging
partner or someone who might see the company's potential. Tom couldn't find one.
The bank that carried significant loans for Domino's persuaded Tom to bring in a
local businessman who was experienced in turning around struggling companies.
On May 1, 1970, Tom Monaghan lost control of his company. Reluctantly, he assigned
his stock partially to the bank and the remaining interest to the local businessman.
He entered into an agreement that allowed him to stay on as president--with no authority.
Who else could they find willing to work sixteen-hour days, seven days a week, for
a $200 weekly paycheck? And seeing that his personal possessions were meager--he
still drove an old, beat-up car and the only furniture he owned was a couple of
beds and a kitchenette--it was clear he wasn't squandering away money.
Working for someone else was a painful arrangement, but it kept Tom from filing
bankruptcy. The new management closed unprofitable pizzerias, cut back on staff,
and reorganized what was left. Tom was put in charge of the twelve corporate stores;
when he traveled between stores, Tom slept in his car to keep down expenses.