Franchising

Retail Food Group faces new class action lawsuit from Michel’s Patisserie franchisees, alleging loss and damages

Dominic Powell /

Embattled franchising giant Retail Food Group (RFG) has taken another blow this week, with law firm Corrs Chambers Westgarth announcing a possible class action against the company over its conduct with current and former Michel’s Patisserie franchisees.

RFG copped criticism earlier this year over reports it had instructed franchisees to extend the use-by dates on certain items sold, which set off an investigation by various food safety bodies across the country.

The company later admitted to the practise but said it had told “less than 1 per cent” of its supplier network to extend the shelf life of products “where appropriate and safe to do so”.

“RFG follows strict standards with regard to food quality and any product date extension was granted following written approval from the supplier and with consumer safety top of mind,” the company said at the time.

However, on Friday, Corrs Chambers Westgarth announced it was fielding interest for a potential class action against the company for “conduct in relation to RFG’s Michel’s Patisserie franchise system”.

“We intend to argue that if RFG had behaved lawfully, franchisees would not have purchased their franchises and that RFG’s conduct caused franchisees (and other persons closely associated with franchisees) loss or damage,” the company said in a statement.

The class action is being backed by litigation funder Augusta, meaning franchisees do not need to pay to participate, and Corrs is currently inviting former and current Michel’s Patisserie franchisees to register their interest.

Speaking to The Age, former franchisee Devi Trimuryani announced she would be the lead plaintiff in the case, saying she could “take them down”. The former Michel’s Patisserie owner said her experience with the company had “ruined her life”.

“My marriage, my financials. I can’t sleep, I’m in a depression because everyone is chasing me for money,” she told the publication.

“I never thought my life was going to be this hard by owning a business in Australia, because I can’t get justice until now.”

RFG has been in the wars for nearly two years now after a 2017 investigation prompted a parliamentary inquiry into the franchising sector, which was released earlier this year and devoted an entire chapter to the company, which also owns Donut King, Crust, Gloria Jeans, Brumby’s and Pizza Capers.

In that chapter, the report alleged the company had profited at the expense of its franchisees and operated a “particularly unjust business model”. It also claimed RFG and its executives participated in insider trading, tax avoidance and breaches of consumer law.

The impending class action, if it goes ahead, will add to an ever-increasing list of headaches for RFG, which also lost a court case earlier this year where it was found RFG breached Australian Consumer Law by misleading two Michel’s Patisserie franchisees about a store purchased in 2012.

It’s also the second class action to be laid against the company in as many years, with firm Bannister Law investigating a class action in January last year over the “severe financial hardship” experienced by Retail Food Group franchisees.

RFG shares were down 3% on Friday, and currently sit at 16 cents.

In a statement, a spokesperson for RFG said it had not been contacted by Corrs Chambers Westgarth “in relation to any potential class action”.

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Dominic Powell

Dominic is the former features and profiles editor at SmartCompany.