Today we bounce, page-86

The problems facing RFG board has very little to do with how many good franchisees out there. We have reached crisis point. The focus is on cashflow not reported profits. Bankers are breathing down on RFG. If was a banker I am thinking weekly incoming and outgoing cashflows and the value of my diminishing security. The bad publicity and price collapse will slow down the take-up of new franchisees. The % of franchisee for sale will rise further. I believe the unsold franchisee comes with continuing lease liabilities which RFG has to pay. RFG's liabilities is increasing by day whilst income from franchisees is declining or at best flat. Bankers may want RFG to top up security with more cash or asset. CR? What about a likely investigation in wage underpayment by the franchisees. How will the franchisees pay? Can't let them all die. The franchisee were only barely viable if they underpay their workers. Maybe RFG should consider taking more borrowings to on-lent to them? The model is breaking down - something has to give. The survival of RFG rests on the bankers now. (What about possible ASIC and ASX's investigation and class action suits - but that's another matter)