'It's like 7-Eleven': claims underpayment is rife at RFG
Sydney Morning Herald
December 18 2017
It was December 9 and Jon had just finished reading about the franchisee scandal at Retail Food Group, the company behind iconic brands including Brumby's, Donut King and Crust Gourmet Pizza, and decided to make a call.
The call was in response to an ad placed in Mandarin in Chinese newspaper Sydney Today, asking for delivery drivers at Crust.
The franchisee, who runs a Crust Pizza franchise in Sydney, told him he had two options: he could be paid in cash at $15 an hour plus up to $2 for each delivery or $17 an hour, plus $2 for each delivery, if he wanted to go on the books and pay tax.
Either deal required him to use his own car and pay associated costs including petrol and insurance. Both offers were below the minimum wage for an adult in Australia.
What the franchisee didn't know was that the caller, Jon, a Chinese student on a visa, was posing undercover for Fairfax Media.
"Underpayment still goes on everywhere," he says. "We are getting more than we used to but we still get less than we should. I sometimes imagine what it would be like if everyone could be paid correct in future."
That the franchisee was still spruiking for cheap labour at a time when the spotlight has never been greater on RFG, speaks volumes about the desperation of franchisees, many of which have gone to the wall due to a brutal business model, which squeezes fees, royalties and high food charges in a quest to grow profits.
Part three of a Fairfax Media investigation into RFG and its franchisees has uncovered claims of widespread underpayment of wages, the deliberate underpayment of penalty rates and the use of families and friends for little or no money.
It can also reveal that many franchisees work long hours for little or no pay to keep costs down. Since the investigation's first part was published, shares in the company have plunged 35 per cent, from $4.40 to to $2.85, to hit a five-year low.
Murray d'Almeida, who founded Retail Food Group, back when it owned two brands the Donut King and bb's, says he is shattered but not surprised at what has been uncovered, including the volume of franchisees failing and cutting corners by underpaying wages.
"The current phenomenon of franchisees working long hours with their family just to pay the bills rather than grow the business and hiring foreign workers is alien to me," he says. "When RFG started, families worked hard but it was so they could build the business and then get others to manage it, or buy other stores, not what's going on now."
He says he went to the UK in 1996 to expand the brands and when he returned to Australia control of RFG had changed. "I could see the writing was on the wall," he says. "I could see the direction it was heading."
He sold out of the business at a fraction of what his shares were worth.
"I walked out in 1999 after 20 years of hard work, but I considered it better to sleep well than eat well."
In 1999, Tony Alford, who would become RFG's long-time managing director and chief executive until stepping down in June 2016, took the reins at RFG.
Fairfax Media last week revealed the colourful history of the former accountant including allegations made by the family of late rock star Michael Hutchence that he was involved in the mismanagement of the INXS frontman. Alford, who has long denied any wrongdoing in the handling of Hutchence's estate, did not respond to Fairfax Media's questions.
Sleep? What sleep?
Former Michel's Patisserie franchisee Vicky Chen walked away from her Michel's store on Bourke Street in Melbourne's CBD in 2015 and says underpayment at RFG is as bad as at 7-Eleven.
"Franchisees can't afford to pay the right wages. It's just not possible to pay the correct wages with all the costs RFG insists we pay," she says.
7-Eleven had systemic wage fraud across its network of convenience stores which so far has resulted in more than 3000 workers being paid back more than $150 million in underpayments after Fairfax Media exposed rampant underpayment. Scandals at other franchises have followed including Domino's Pizza and Caltex prompting the federal government to pass new laws to try and tidy up the franchise sector.
But the changes don't appear to have affected those working under the RFG umbrella.
A Crust Pizza franchisee with two stores in the top end of Australia says she owes her staff wages and doesn't know when they will be paid.
"Not being able to tell them when I can pay it... I have nothing left to give them," she says.
"Most Mondays still in the red, Wednesday is wages, can't pay them, again haemorrhage our own funds, don't even mention the tax bill, the superannuation, rent, avoiding the landlord's calls. Sleep? What sleep. Scared to open emails, what can't I pay this week but even if the account didn't have enough in it the RFG fees still managed to be debited."
A trawl of ozYoYo, a website many foreign nationals use to find jobs reveals several Crust and Pizza Capers ads including one placed last year for a delivery driver at Crust offering a base salary of $10 an hour and $2 delivery fee.
In the fast food industry, the minimum award rate for an adult is $20.08 per hour.
RFG workers confirmed to Fairfax Media they were being paid well below the award rate at between $10 and $15 an hour in cash without penalties, superannuation or payslips.
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Its Like 7-Eleven, Claims Underpayment Is Rife (Read 2061 times)
