Retail Food Group faces class action over share price wipe-out

Retail Food Group faces class action over share price wipe-out

The besieged franchising giant behind the Gloria Jean's, Donut King and Brumby's chains is under attack on a new front, with a possible class action in the works on behalf of investors who lost money in the company's share price wipe-out.

Retail Food Group has also received a “please explain” from the ASX about a profit downgrade it issued on Tuesday, which accelerated a share price freefall that obliterated $512 million, or 63 per cent, of the company's market value in just eight days trading.

Bad case of corporate indigestion
Retail Food Group has been expanding for years, buying one retail food chain after another across Australia.

RFG's shares had been tumbling since last Monday, after Fairfax Media revealed that many of its franchisees were struggling to surviveunder a model that demands they pay hefty fees, royalties and food bills to head office.

The company, which also owns the Crust and Pizza Capers brands, claims to have more than 2500 stores, but Fairfax has revealed that at least 200 have closed in the past 12 months and that more than 200 stores are up for sale.
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