Troubled franchisor Retail Food Group has responded to claims made in the January 29 episode of Channel Nine’s A Current Affair.
Monday night’s program featured personal stories of failed businesses across the franchise group and included testimony from a former RFG debt collector.
Elke Meyer told ACA she had heard distressing tales of franchisees pushed to their emotional and financial limits, and yet her warnings to RFG executives that the debt levels were “unethical” fell on deaf ears.
Meyer, a former police officer, worked within the Gloria Jean’s network and left the company “in disgust” reports ACA.
A second area of concern reported in the program is the spectre of misrepresentation. Several franchisees claimed that false financial information was provided to them by RFG before they signed a franchise contract, something that law firm Bannister Law is pursuing in regard to a possible class action.
RFG issued a statement responding to the broadcast.
“With such a large network, we don’t get it right every time or claim that all of our franchisees and employees are always happy, but we do know that we are working extremely hard to support them in tough retail market conditions.
“We can’t control shopping centres putting up their rents or wage costs going up, but we are committed to supporting our franchisees in the areas we do control, such as field support and supply chain.
“The fact that we have some unhappy former and current franchisees tells us we need to do better in some areas.”
The statement referred back to the company’s business-wide review to improve the support, value and services and the recent appointment of a new CEO.
Despite the “negative experiences of some franchisees” the majority of the franchisee network is running successful businesses, the statement suggested.
“Franchise businesses like ours have a better chance of success than most small businesses – the average tenure of an RFG franchisee is seven years, which is consistent with broader franchise industry trends, compared to 60 per cent of small businesses that close within three years,” the statement concluded.
