Lawyers announce possible class action against RFG

Posted by AFN Staff Writers on 7th March 2018

Maurice Blackburn Lawyers has announced it is collecting interest from Retail Food Group shareholders for potential class action against the company.

The announcement comes after Retail Food Group (RFG) announced a drop in profits following months of negative media attention focused on its relationship with its franchisee partners.

Retail Food Group is responsible for a number of quick service food brands operating in Australia including Crust Pizza, Donut King, Gloria Jean’s and Brumby’s Bakery.

Class Action Principal at Maurice Blackburn, Ben Slade, said RFG appears to have misled the market and has repeatedly failed to explain that its franchise model was unlikely to be profitable in the long term.

“If you’re running an unfair and unsustainable franchise business model that forces, in at least one reported instance, a franchisee to desperately try to sell her business for only $1, the market will eventually find you out,” Slade said.

“It’s completely unacceptable to exploit franchisees while relying on shareholder equity to pump up a poor business model. The lack of transparency of the true business fundamentals of the operation is a breach of the disclosure requirements in the Corporations Act.

“That is why shareholders are furious and have been dumping the stock, and that is why we are proposing to represent their interests in a bid to recoup some of those unfair losses.”

Maurice Blackburn said its investigations so far have revealed problems with RFG’s franchise model going as far back as 2015.

“Publicly available information suggests that RFG adopted an exploitative business model as early as June 2015 yet it failed inform the market of its true state of affairs,” Maurice Blackburn Lawyers stated.

Maurice Blackburn is now calling for shareholders who purchased fully paid ordinary shares in RFG from 2 June 2015 up until the trading halt on 28 February 2018 to register their details. Maurice Blackburn will be conducting further research before deciding if it will proceed with class action against Maurice Blackburn.

Another Australian law firm, Bannister Law, has already announced it is exploring initiating class action against RFG on behalf of its franchise partners.


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