'They talk in code': Simple act could have saved business

AS RETAIL Food Group tries to save its struggling business model with reduced fees, franchisees are forced to speak in code to access support groups.

Amanda and Bryan Kelly struggled to get back on their feet after being involved in a Retail Food Group franchise. Picture: Warren Lynam

AS RETAIL Food Group tries to save its struggling business model with reduced fees, franchisees are forced to speak in code to access support groups.

RFG - which includes brands Donut King, Gloria Jean's, Pizza Capers, Brumby's and Michel's Patisserie - has been in the spotlight recently following a Fairfax investigation into its "brutal business model" with stocks hitting a 10-year low at $1.30 early last month.

Amanda Kelly and her husband Bryan owned the Sunshine Plaza Brumby's for four years from 2009, but crippling fees, a lack of support and compulsory refurbishments left them $800,000 in debt.

Support groups have been set up by Franchise Redress - an action group that helped investigate the company - with former and current franchisees swapping stories about how RFG changed their lives for the worst.

"It certainly gives us back our pride," Mrs Kelly said.

"The ones that are still in the business talk in code, but the one's that aren't - they're free to talk."

Now, an increasing number of financially devastated franchisees are jumping on board a class action against the company and a parliamentary inquiry into the franchisee sector has been proposed.

The Kelly's have also joined the legal battle, but Mrs Kelly said if the fee changes had have come sooner it would have helped them "immensely".

RFG recently announced through a newsletter to their franchisees that renewal fees would be reduced along with supply prices where possible.

Mrs Kelly said they were "forced" to purchase through RFG's supplier which charged inflated prices for flour - a staple for their bakery business.

After they bought it cheaper from elsewhere, Mrs Kelly said they were "given a slap on the wrist" when word got up the chain to head office.

"We put our blood, sweat and tears into the business, but it wasn't us," she said.

"It was the structure of the RFG business."

Franchise Redress co-founder, Michael Fraser, said the fee cuts were like "handing out glasses of water to people with their house on fire" and were only one issue franchisees had with the company.

"The top complaints we received from RFG franchisees included; not knowing where their marketing fund contributions were being spent (if at all), crippling fees and cost of goods and no support from head office," he said.

Originally published as 'They talk in code': Simple act could have saved business