The head of embattled cafe and pizza outlet owner Retail Food Group, Andre Nell, has been replaced by the man overseeing the company’s business-wide review.
RFG, the owner of Gloria Jean’s, Donut King and Crust Pizza, says Richard Hinson, who was hired by the company in January to lead a strategic review triggered by problems within its franchise network, has been promoted to group chief executive.
Mr Nell will leave the company on Tuesday after almost two years as the group’s managing director.
RFG was hit with a string of accusations late last year from former and current franchisees that they had been run into the ground with exorbitant fees, including high marketing and food costs, poor quality food and a lack of support.
The company later appointed Mr Hinson, a former executive at supermarkets wholesaler Metcash and confectionary maker Wrigley Pacific, to improve the company’s support for franchisees and ensure their profitability.
Chairman Colin Archer said the leadership change showed the board’s commitment to improving relations between head office and franchisees.
“Richard is gaining the confidence of our franchisees and has restored some momentum to the business by delivering immediate benefits and focusing on longer term strategic plans for each brand system,” Mr Archer said in a statement.
The company said it has reduced the costs of goods, renewal and new store fees, and worked with franchisees to pilot innovative new store concepts.
It said the senior executive team, which includes chief financial officer Peter McGettigan and Di Bella Coffee chief executive Darren Dench, has been working closely with franchisees on new product ranges and quality, supply chain improvements and a customer loyalty program.
Mr Hinson said it would take 12 to 18 months to turn around the RFG business.
“Our core business is fundamentally sound and we are working hard to improve franchisee relationships and profitability,” Mr Hinson said.
Mr Nell, who was general manager of Michel’s Patisserie when RFG bought that business in 2007, became the group’s managing director in July, 2016 after Tony Alford resigned following 17 years at the helm.
RFG is one of a number of franchise networks, including 7-Eleven, Domino’s Pizza and recently Red Rooster and Oporto’s parent company Craveable Brands, to make headlines for either mistreating franchisees or for widespread underpayments of franchisees’ staff.
A federal parliamentary inquiry into the franchise sector is underway in response to the string of allegations to rock the industry in recent years.
Shares in RFG, which were trading at $4.40 in early December 2017, gained 7.5 cents, or 9.7 per cent, to 84.5 cents on Tuesday.