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SHARES in Retail Food Group (ASX: RFG) have slumped nearly 23 per cent, following a Fairfax Media investigation which has reported scathing accusations against the group.
Shares in the listed franchisor and owner of Gloria Jean's, Donut King, and Brumby's Bakery brands, have fallen to a five-year low amid allegations it is running its franchisees into the ground.
The Fairfax investigation claims RFG is crippling franchisees both fiscally, personally, and emotionally. It also alleges that the group has charged fees and other costs to boost its profits, leading some franchisees into bankruptcy which in turn has led to systemic staff underpayment and destroyed relationships.
RFG has since rejected the accusations made by a number of franchisees in the Fairfax report.
"The Company's current strategy, management team focus on responding to challenging retail market conditions, including efforts to support its Franchise Partners and their team members, and its financial and operational performance, all of which have previously been announced by the Company, are not, in the Company's view, accurately reflected in the Fairfax Media's coverage," says RFG in a statement to the ASX.
Shares in the group are currently at a five year low, down $1 to $3.40 cents per share, a slump of 22.7 per cent, at 1.40pm AEDT.
RFG denied claims that it was not supporting its franchisees.
"We reject this assertion and reiterate the fact that our success depends on the success of our franchise partners," says the company in a statement.
RFG says it has rolled out a number of measures to improve store performance while bolstering resources to support the brands.
The company is also reviewing its entire business to see if the franchise model remains appropriate for the current retail environment.
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