Retail Food Group profits to be hit by negative attention

Posted by Andrea Hogan on 20th December 2017

The Retail Food Group has said revenues from new and renewing franchise sales are now forecasted below prior expectations for the first half of its 2018 financial year due to the recent negative media attention its franchising arrangements have received.

Earlier in December 2017, the Retail Food Group (RFG) was subject to a Fairfax investigation that alleged the company is not supporting it franchise partners properly. The results of the investigation made a number of claims including that RFG franchise partners have felt forced to sell their stores at large discounts and have been underpaying employees to help make ends meet.

RFG franchise businesses include Gloria Jean’s Coffee, Donut King, Pizza Capers and Michele’s Patisserie.

This week, RFG made an Australian Securities Exchange (ASX) update saying the recent negative media coverage has contributed to a noticeable decline in momentum in new and renewing franchise sales.

“Associated revenues are now forecast to be below prior expectations and future franchise trading revenues are also likely to be impacted,” RFG said in its ASX statement.

RFG said net profit after taxes for the first half of its 2018 financial year is expected to be approximately AUD $22 million. This is down on the company’s AUD $33.5 million profit after taxes it achieved in the first half of its 2017 financial year.


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