A third law firm is preparing to launch a class action against the company behind Michel’s Patisserie and Gloria Jean’s for its failure to disclose troubles within its franchise network.
Retail Food Group’s market value more than halved in December 2017 when media reports of mistreatment of franchisees were first published.
The company has since begun a major review of its business and flagged the closure of up to 200 outlets due to unsustainable rents and poor performance.
Law firm Phi Finney McDonald is seeking investors who bought shares in Retail Food Group between April 2017 and the end of February 2018, and alleges RFG failed to disclose to investors that its franchise model had material financial risks and the networks were deteriorating.
The potential class action has been backed by litigation funder IMF Bentham.
Bannister Law is also investigation two potential class actions against RFG, one on behalf of shareholders and another for franchisees, while Maurice Blackburn is also looking into a potential action for shareholders.