Disenfranchised Retail Food Group investors to take action
6 March 2018
After watching the market capitalisation of Retail Food Group (RFG) lose well over $550 million since reports of widespread problems within the franchise leviathan were exposed late last year, investors will now be able to hold the company to account for failing to disclose its unsustainable franchise model.
Australia’s leading class action law firm, Maurice Blackburn Lawyers, has today opened a simple online registration portal to enable aggrieved shareholders to participate in a potential recovery of some of their losses via a shareholder class action.
To register, shareholders can visit www.mauriceblackburn.com/RFG and enter their details. Registration is free, non-binding and without any risk of liability.
After dropping from well over $4 to a low of $1.62 in December 2017, RFG suffered another large drop of more than 35 per cent when it came out of a trading halt on 5 March 2018, indicating shareholders are sick of the company surprising them with bad news.
Class Action Principal at Maurice Blackburn, Ben Slade, said RFG appears to have misled the market and has repeatedly failed to explain that its franchise model was unlikely to be profitable in the long term.
“If you’re running an unfair and unsustainable franchise business model that forces, in at least one reported instance, a franchisee to desperately try to sell her business for only $1, the market will eventually find you out,” Mr Slade said.
“It’s completely unacceptable to exploit franchisees while relying on shareholder equity to pump up a poor business model. The lack of transparency of the true business fundamentals of the operation is a breach of the disclosure requirements in the Corporations Act.
“That is why shareholders are furious and have been dumping the stock, and that is why we are proposing to represent their interests in a bid to recoup some of those unfair losses.”
Maurice Blackburn’s investigations have so far revealed problems with RFG’s franchise model going back as far as 2015. Publicly available information suggests that RFG adopted an exploitative business model as early as June 2015 yet it failed inform the market of its true state of affairs.
Maurice Blackburn is calling for shareholders who purchased fully paid ordinary shares in RFG from 2 June 2015 up until the trading halt on 28 February 2018 to register their details online. Further investigations will determine if the proposed class action proceeds.