In 1961, Tom Monaghan and his brother, James, took over the operation of DomiNick's, an existing location of a small pizza restaurant chain that had been owned by Dominick DiVarti, at 507 Cross Street (now 301 West Cross Street) in Ypsilanti, Michigan, near Eastern Michigan University. The deal was secured by a $500 down payment, and the brothers borrowed $900 to pay for the store. The brothers planned to split the work hours evenly, but James did not want to quit his job as a full-time postman to keep up with the demands of the new business. Within eight months, James traded his half of the business to Tom for the Volkswagen Beetle they used for pizza deliveries.
By 1965, Tom Monaghan had purchased two additional pizzerias; he now had a total of three locations in the same county. Monaghan wanted the stores to share the same branding, but the original owner forbade him from using the DomiNick's name. One day, an employee, Jim Kennedy, returned from a pizza delivery and suggested the name "Domino's". Monaghan immediately loved the idea and officially renamed the business Domino's Pizza, Inc. in 1965.
The company logo originally had three dots, representing the three stores in 1965. Monaghan planned to add a new dot with the addition of every new store, but this idea quickly faded, as Domino's experienced rapid growth. Domino's Pizza opened its first franchise location in 1967 and by 1978, the company expanded to 200 stores. In 1975, Domino's faced a lawsuit by Amstar Corporation, the maker of Domino Sugar, alleging trademark infringement and unfair competition. On May 2, 1980, the Fifth Circuit Court of Appeals in New Orleans found in favor of Domino's Pizza.