The committee has called on regulators to investigate RFG.Credit:Jessica Shapiro
The report,released on Thursday,said it considered the RFG business model “high risk”,relying on buying new brands,stripping out costs,“exploitative fee gouging” of franchisees and slashing services.
“This is a strategic system-wide approach to business whereby RFG's success relied on extracting profits from its franchise systems with hugely deleterious results for franchisees,” the report said.
Loading
It questioned why the regulators hadn’t conducted “forensic” investigations into RFG,which was the subject of more submissions to the inquiry than any other company.
“The committee is surprised that none of the relevant regulators appear to have undertaken any investigation that has led to court action,or,at the very least,public acknowledgement of misconduct,” the report said.
RFG’s troubles were first exposed in amedia investigation byThe Age andSydney Morning Herald in December 2017,which outlined a crushing business model that was pushing franchisees to the wall. At the time,the share price was $4.40. Its latest share price is 20¢.
The report described former RFG chief executive Tony Alford as “evasive,inconsistent and generally uncooperative” in his testimony to the committee. “The committee did not find Mr Alford to be a reliable or credible witness,” the report said.