RFG head defends code

Review of franchising agreements ‘unnecessary’

THE boss of Gold Coast food franchisor Retail Food Group says a review of the Franchising Code of Conduct is “unnecessary” as the current regulatory environment offers sufficient protections for franchisees.

Managing director Andre Nell spoke to the Bulletin after its stock price was hammered in the wake of Fairfax Media reports about the impact of its business model on franchisees.

The reports claimed the Southport-based company had prioritised profits for shareholders above the livelihoods of their franchisees, many of who have been forced to sell their stores at a loss.

Yesterday the Bulletin reported that the co-founder of Brumby’s bakeries was calling for a Sentate inquiry into the franchise system in the wake of allegations of systemic unfairness.

The Franchising Code, which is regulated by the Australian Competition & Consumer Commission, has been in operation since 1998. It sets: disclosure requirements; a good faith obligation; a dispute resolution mechanism; a cooling-off period for transactions; and procedures for ending a franchise agreement.

The ACCC investigates breaches of the code and can issue infringement notices against parties that violate the code or can ask the court to impose a financial penalty.

Mr Nell said the company disputed the accuracy of the Fairfax reports.

“We fundamentally disagree with the media coverage and the impact that that is having,” he said. “The share price is not reflective of the value of the company and I guess its my job to change that.”

He said RFG had a number of initiatives under way to improve outcomes for its franchisees, including a Deloitteassisted company-wide review begun in June, and the release of new consumer products.

“All of these pieces show a franchisor that is dedicated to enhance the performance of our franchisees and we recognise the symbiotic relationship we have with them and how their financial success and our financial success are intrinsically linked,” he said.

He rejected the assertion by Vertium Asset Management equity analyst Daniel Mueller that RFG had too many brands that overlap and “cannibalise” business from each other.

“We don’t think a review is necessary but we would happily be involved in one if that was required,” Mr Nell said.