No way to earn a crust
A FORMER Gold Coaster is among scores of franchisees claiming they have lost hundreds of thousands of dollars through embattled franchisor Retail Food Group.
For more than eight years Robert Verni and his family ran one of the most successful BB’s Cafe’s in the state at Robina Town Centre, before renewing the franchise as Michel’s Patisserie in 2013.
But on July 6 this year, the family abruptly shut up shop, saying it was unable to continue trading thanks to high rent, fewer customers and multiple refurbishments totalling more than $300,000.
It comes as other franchisees tell similar stories through Fairfax Media reports, which allege the Gold Coast-based retail group was underpaying staff and had unsustainable franchise fees.
This week, RFG recorded a staggering 34 per cent drop in profit for the first half of the financial year, with the share price now hovering around $2.15 – down from $4.40 at the start of December.
“We were the number one stores in Australia, as BB’s Cafe and Michel’s Patisserie,” Mr Verni said, adding that trading became so bad it couldn’t support his brother-in-law’s wage.
“Now my father and mother-in-law are in debt because of RFG’s negligence.”
His parents-in-law used their house to become guarantors during the Michel’s Patisserie renovations, he said, placing them into debt of about $350,000.
Mr Verni said at the time RFG placed undue pressure on him to change to the new brand because the lease needed to be renewed, despite indications the franchise wasn’t going well.
“We had a lot of promises made to us (that didn’t eventuate) and we had no choice but to sign the documents,” he said. “It’s affected our livelihood, financially, emotionally and morally.”
Mr Verni said as part of the lease renewal they needed to complete a $175,000 refurbishment of the cafe, which took more than a month.
Prior to that RFG had required a refurbishment of BB’s Cafe, which cost around $150,000 in 2009.
He said their prior franchise had had little support from RFG, including no business development meetings (BDMs) for more than 15 months before July, having been replaced by a franchise care centre, and a 65 per cent rent increase through Robina Town Centre’s QIC in 2009.
“We (were) paying quite a bit per square metre compared to other (similar businesses),” he said.
“When I asked why, they said because of the location.”
Mr Verni said he had been a restaurant owner for nearly two decades and this was the first time he had been forced to walk away from a business.
RFG did not return requests for comment.