The firm behind a few of Australia’s greatest franchises has been humbled by the nation’s competitors watchdog in a $10m settlement, with the publicly listed Retail Food Group Ltd agreeing to pay its former franchisees and waive their historic money owed.
RFG, whose manufacturers embody Donut King, Gloria Jean’s, Brumby’s Bakeries and Michel’s Patisserie, has been topic to proceedings from the Australian Competition and Consumer Commission (ACCC) since December 2020.
The ACCC alleged FRG had bought shops to franchisees with out disclosing that they had been working at a loss and made funds from Michel Patisserie’s advertising fund that weren’t reputable advertising bills.
For that, RFG has agreed to pay $5m to Michel’s Patisserie franchisees who paid levies into that advertising fund from 2012-2017.
RFG had additionally agreed to waive historic money owed and make funds to among the affected franchisees, the ACC confirmed on Friday morning.
Chair Gina Cass-Gottleib stated the ACC had been “concerned” concerning the impacts on small companies by the alleged misconduct.
“We’re pleased that RFG has agreed to make payments to certain impacted franchisees,” Ms Cass-Gottleib stated.
“We initially took this action because we were concerned with the alleged conduct and the impact on a number of small business operators.”
Ms Cass-Gottleib stated the settlement, the funds and waived money owed of which quantity to about $10m was a greater outcome than something that would have been obtained from ongoing authorized proceedings.
RFG has additionally agreed to pay a contribution to the ACCC’s authorized prices.
Former ACCC chair Rod Sims advised NCA NewsWire in December 2020 that greater than one-third of the 42 affected companies had closed.
“The prospective franchisees simply had no way of knowing the true financial performance of the stores and we allege the Retail Food Group took advantage of this when selling or licensing the stores,” Mr Sims stated on the time.
Under the court-enforceable enterprise, RFG will probably be required to frequently report back to the ACCC concerning the actions taken and funds made beneath the enterprise in addition to undertake a compliance program.
