Do I read that article and am at a real loss as to what Alford did to this guy that was against the law / untoward. (Note I think Alford was the instigator of this house of cards and presented the business to raise capital / push a narrative to make a massive profit and exit to the expense of shareholders who were left).
Alford was supportive and communicative of apparently one of the best Brumby's Franchisees. He wanted somebody with experience to take over some under performing sites so he wine and dine'd the guy. So be it.
Ok next point, they had a model whereby successful franchisee's were incentivized to take over stores and turn them around. Cool, that seems like a good idea for RFG to actually do. The $1.1 Mill losses would have included wages, area managers, hr, etc. So in theory if you take out some of the corporate costs, and run them efficiently, probably not a bad business idea. They offered him a $750 per week (per store or for the pack of them?) management fee for 3 months (which more fool him, should have been for a longer period if he needed it) and no franchise fees. He took them over and it didn't work, probably because Brumbys was a dying business model.
Was Alford ruthless to achieve his outcome. Sure.
Was Alford looking to move loss making businesses of the RFG accounts. Sure.
Did Alford actually do anything wrong. Probably not.
Seems like the guy is more upset that it didn't work out and that Alford got the better end of the deal, sure. The guy didn't take this on because he was doing Alford a favour or RFG a favour, he did it because he thought he could make some money. The guy was well aware they were loosing $1.1 mil a year and signed up FFS. Then he complains that its Alford's fault for going broke????? THEY WERE LOOSING $1.1 Mil a year!!!!!
Also I struggle to see how 9 / 10 under performing stores would have stopped RFG getting funding to purchase Gloria Jeans, that just seems illogical - 9 /10 stores loosing 1.1 Mil a year wouldn't have even been on the radar for the banks to purchase Gloria Jeans. The fact that the guy thinks that a $160 million deal was decided by the 9 / 10 stores.... get a grip.
I know that there are a lot of conspiracy stories around Exit 57 Investments Alford should have disclosed that his partner was involved there as a related party. But I really struggle with the logic of how it was a magic hole to hide failures. If those businesses were loosing that much money where was the money coming from? It wouldn't ultimately matter to RFG's financials if they were paying a $100k management fee vs owning and supporting the business for $100k - at the end of the day its the same cost basis - money going out... I don't see Alford carrying $1 million to $10 million in personal losses to carry some crappy under performing franchises.
I have worked with groups like RFG that manage their own businesses and its a special skill set to run small businesses, that is really hard to find in an employee. There are costs that are substantially greater for an RFG than a smaller / private - Accounting, legals, etc. I think its a great idea that RFG identified 10 under performing stores and offer them to the guy on discounted terms plus offering to support him (the management fees & discounted loan). The theory is that he would be better suited than a corporate model to understand the needs of each businesses and keep the costs down (nobody keeps costs lower than the person paying out of their own pocket).
The guy should have gotten better terms (like say a 2 year management fee vs 3 months) but that's the commercial terms of the day. Not a conspiracy to defraud shareholders.
At the rate we are going in this country, you are not going to be allowed to buy the car you want, because the public will need to be protected from themselves. Oh you are young and recently met a girl, oooohhh, no sorry we are not allowed to sell you this sports car, you need a family car, because you will be having a family soon. FFS
Alford has done some pretty average things with shareholder money, but i don't really see what he did wrong here.
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