Retail Food Group faces class action
Here's the full release of the class action by IMF Bentham Limited.
Class action law firm Phi Finney McDonald and dispute financier IMF Bentham Limited have announced a class action against Retail Food Group Limited (RFG) for misleading or deceptive conduct and breaching continuous disclosure obligations.
RFG operates franchise networks in Australia and 58 individual markets through household brands including Donut King, Brumby’s Bakeries, Michel’s Patisserie, Gloria Jean’s Coffee, Crust Gourmet Pizza, Pizza Capers Gourmet Kitchen, The Coffee Guy and Café2U.
Fairfax Media articles and RFG announcements between December 2017 and February 2018 revealed RFG’s franchise model was under stress, there was serious deterioration in the financial performance of domestic franchise networks, and the allocation of rewards between franchisees and the franchisor required ‘rebalancing’.
The class action alleges that RFG failed to disclose to the market that its franchise model had material financial risks and its franchise networks were deteriorating. The company misled investors regarding its financial position and performance; RFG failed to disclose the situation was concerning enough for it to appoint Deloitte Touche Tohmatsu to review the sustainability of its franchise model; and RFG’s August 2017 profit guidance for the 2018 financial year lacked reasonable grounds.
The class action is open to investors who suffered loss after acquiring shares in RFG between 18 April 2017 and 28 February 2018 (inclusive).
“Shareholders should be angry. RFG’s Board knew about critical defects in the franchise model and the financial crisis afflicting its franchise networks. However, RFG investors only discovered these issues from media coverage in December 2017,” said Phi Finney McDonald director Tim Finney.
“RFG continued to deny any structural dysfunction within its franchise and didn’t properly reveal the difficulties until March 2018,” Finney said.
“By concealing these serious problems from the market, RFG shares traded at an artificially inflated price,” Mr Finney said. “This class action seeks compensation for investors who suffered substantial loss and damage as a consequence of RFG’s misconduct.”
IMF Investment Manager Matt Kennedy added, “IMF Bentham’s seasoned litigation experts have carefully examined RFG’s conduct and consider that investors have strong grounds to recover their losses”.
Phi Finney McDonald and IMF Bentham encourage all investors who acquired shares in RFG between 18 April 2017 and 28 February 2018 (inclusive) to register their interest with IMF Bentham.
