Food group’s fresh suit
DONUT King and Gloria Jean’s franchisor Retail Food Group has been hit with class action by current and former owners of its Michel’s Patisserie chain.
Retail Food – whose shares have plunged almost 99 per cent over the past five years – says the company has been notified of legal proceedings in the Federal Court against the company and two of its related entities by a former Michel’s franchisee and others.
“No allegations have been
made in the proceedings in respect of the other brand systems operated by RFG,” the company said in a statement to the ASX.
“The proceedings, the possibility of which was disclosed in the company’s past accounts, relate to the historical conduct and operation of the Michel’s Patisserie brand system under former Retail Food Group leadership, including changes implemented to the supply chain during the period 2015 – 2016 (the ‘fresh to frozen’ model), and alleges breach of franchise agreement, contraventions of the Australian Consumer Law and the Franchising Code of Conduct.”
The Queensland-based company said the representative applicant was seeking damages, declarations, interest and costs on behalf of the representative group.
“It is not currently possible for Retail Food Group to quantify the financial implications of the outcomes being sought against it in the proceedings. Retail Food Group is currently reviewing the allegations made in the proceedings, which have been commenced by way of Originating Application and Concise Statement and not by way of a fully particularised Statement of Claim.
“That said, the company denies the allegations raised against it and its related entities, and will be defending the proceedings.”
Retail Food has had a spectacular fall from once being a high-flying star on the ASX as its shares raced to almost $7 off the back of its growing food empire.
Its shares are now trading around the 8c level following a string of scandals around the treatment of its franchisees, its finances, tax affairs and other competition issues that brought it to the attention of tax, competition and corporate regulators. Some of the pressure on the company was lifted last year with the ending of an ASIC investigation without any enforcement actions.
Late last year, the nation’s competition regulator commenced proceedings in the Federal Court against Retail Food and five of its related entities, alleging the company engaged in unconscionable conduct and made false or misleading representations in its dealings with franchisees, in breach of the Australian Consumer Law.