Gold Coast’s Retail Food Group rejects fresh claims of underpaid staff, share price plunges further

EMBATTLED franchisor RFG has been forced to again defend its business practices amid accusations of widespread underpayment of staff. Shares reached another five-year low today.

Crust Gourmet Pizza.

EMBATTLED Gold Coast franchisor Retail Food Group has been forced to again defend its business practices amid accusations of widespread underpayment of staff in its franchises.

RFG has rejected claims, made by Fairfax Media, who sent a Chinese student undercover to inquire about work at a Crust pizza store, where he was reportedly offered illegally low pay rates.

The reports followed daily claims of franchisees being charged unsustainable fees which they say have made it hard for them to succeed.

Michel's Patisserie is part of Retail Food Group. Picture: supplied.

Since the claims were aired shares in the company have plunged more than 40 per cent, from $4.40 to $2.60, hitting a new five-year low nearly every day for over a week.

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RFG have responded by launching a public campaign highlighting the stories of successful franchisees and also denied in a statement to the ASX there were any systemic issues around pay.

Managing director Andre Nell has also rejected calls for an overhaul of the franchising code, saying current laws offered sufficient protection to all parties.

“This coverage it does not accurately reflect its current business, its proactive efforts to better assure employee entitlement compliance and the levels of support it provides to franchisees,” the statement said.

RFG Chairman Colin Archer and managing director Andre Nell.

“RFG has no evidence of any widespread franchisee noncompliance with employee entitlement payments.

“Since Fairfax Media published its initial article on 9 December 2017, RFG has received just one telephone inquiry through its support hotline from an employee, which it is investigating. RFG’s franchisee network employs more than 10,000 employees.”

Things haven’t been so sweet for some Donut King franchisees.

The company said it accepted there were “isolated incidents” and that any allegations were “diligently investigated”.

The company said it had worked to educate its franchisees on complying with wage requirements and also ran audits to find and fix breaches.

RFG has appointed Deloitte to undertake an external review of its Employee Entitlement Monitoring and Compliance Framework.