Value of Gold Coast franchisor Retail Food Group plunges after reports of `brutal business model’

A GOLD Coast corporate giant has lost more than $180 million in two days, and continues to lose value today. Here’s why.

Shares in RFG have so far fallen by more than 23 per cent.

GOLD Coast franchise giant Retail Food Group has lost more than $180 million in two days, and continues to lose value today after weekend media reports about the impact of its business model on franchisees.

Shares in the company, which controls brands including Donut King, Gloria Jeans, Pizza Capers, Crust, Brumby’s and more, plunged from $4.40 on Friday to open at $3.79 this morning, and dropped as low as $3.21, before recovering to $3.50 by 11am.

68 REDUNDANT IN RFG RESTRUCTURE

RFG PROPERTIES ON THE MARKET

Retail Food Group (RFG) Managing Director Andre Nell talks to a shareholder during the company's annual general meeting in Southport earlier this month.

Reports by Fairfax on Saturday claimed franchisees were being charged unsustainable fees, which had led to staff underpayment and bankruptcies.

The reports claimed the Southport-based company had prioritised profits for shareholders above the livelihoods of their franchisees, many of which have been forced to sell their stores at a loss.

The media organisation said it had received more than 100 calls since Saturday with more examples, including one which compared life as an RFG franchisee to slavery.

RFG reported $349.3 million in revenue, up from $275.1 million the previous year for a net profit of $75.5 million — 14 per cent higher than FY16.

It today rejected claims of a “brutal business model”.

“We reject this assertion and reiterate the fact that our success depends on the success of our franchise partners.”

Retail Food Group Managing Director Andre Nell (right) and Chairman Colin Archer.

The statement said the company had rolled out a number of measures to improve store performance while bolstering resources to support the brands.

“We’ve implemented a new strategy focused on better assuring the long-term sustainability and profitability of not just our own business, but those of our franchise partners and other customers,” it said.

Shareholders of RFG received total dividends for the year of 29.75 cents per share, an increase of 8.2 per cent on the prior period.