If there is added wages expense going forward and historical claims for underpayment which will possibly drive some businesses into the ground faster and thus RFG gets less income just how does the underlying Div continue to get paid going forward? No fees from failed franchises, no income from mark up on ingredients. possible ASIC and ACCC action will not help. Sale price of franchises will have been hurt by this media as well.
Yes this business may be oversold at some point but where that will be will involve a lot more detailed statement than the small titbit put out today IMO. Fairfax may have done franchisees a favour as it is highlighting the plight some find themselves in and it may lead to RFG changing some fees and practices leading longer term to a better run business but the transition will be unstable time without clear statements rather denials and bottom covering by RFG.
Lets see what business model this ends up being going forward.
RFG Price at posting:
$2.71 Sentiment: None Disclosure: Not Held
