RFG shares hit by media reports of mistreatment of franchisees

Donut King owner Retail Food Group has rejected reports of mistreatment of franchisees, as its shares dived to a five-year low.

A Donut King franchise

Gloria Jean’s, Donut King and Brumby’s Bakery brands’ owner the Retail Food Group has rejected media reports of mistreatment of franchisees.

Retail Food Group (RFG) shares today dived 27 per cent to a five-year low of $3.21 dive in the wake of the Fairfax Media reports, before recovering some ground.

A Fairfax Media investigation claims RFG is charging crippling franchise fees and other costs in its search for bigger profits. This, it’s reported, has driven some franchisees to bankruptcy, destroyed marriages and has led to systemic wages fraud.

The RFG, which is the country’s biggest food franchise operator and includes Crust Pizza, Pizza Capers and Michel’s Patisserie, has rejected the accusations.

“Fairfax Media has published coverage alleging RFG is not supporting its franchise partners,” a company statement said.

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

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.

This included appointing Deloitte to help conduct a business review across all its brands to ensure “our franchise model remains appropriate for a retail market which remains challenging”.

The company said it takes its responsibility around wage compliance seriously and had been educating franchise partners for some time about their employer obligations, while providing staff avenues to raise complaints.

Fairfax today reported that RFG had issued a warning to store owners to not air their complaints publicly or risk breaching their franchise agreement.

AAP

AAP