Proposed Michel’s Patisserie class action to hit the streets

By Nick Hall | 05 Aug 2019 View comments

An impending class action lawsuit against troubled franchisor Retail Food Group (RFG) is gathering steam, with lawyers set to take to the streets in a series of information sessions.

The RFG class action proposal was floated earlier this year, when law-firm Corrs Chambers Westgarth revealed it had spent months investigating the business practices and franchisee conditions of RFG café chain, Michel’s Patisserie.

The law firm alleged that RFG had beached the Consumer Law Act, in previous dealings with Michel’s franchisees.

“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,” Corrs Chambers Westgarth said at the time.

Class action roadshows

Late last week, the firm ramped up the litigation process, unveiling plans to hold franchisee information roadshows.

According to reports, Corrs Chambers Westgarth will be holding five sessions across the country, finishing with a final forum in September.

The roadshows allow Michel’s Patisserie franchisees to come forward and learn more about the class action process, which is being funded by litigation specialist Augusta.

All former of current Michel’s Patisserie franchisees have been invited to attend, with Corrs Chambers Westgarth suggesting those who have suffered loss or damage as a result of RFG’s conduct, may be eligible for compensation.

RFG ongoing complications

It’s another blow for the embattled franchisor, which just last week announced the departure of its longest serving director, Jessica Buchanan.

Buchanan’s resignation from the RFG board, while not severing ties completely (she will stay on as a consultant) may see a fresh face join the mix. However, the struggling company’s hopes for a new beginning may already be in jeopardy.

A July announcement that RFG had engaged in discussions with Sydney-based firm Soliton Capital for a $160m restructuring project was fraught with contention. The franchisor had just days earlier told the ASX it was unaware of any price-sensitive information that could have led to a near-two month share price high.

On Monday, The Age and The Sydney Morning Herald reported that RFG had granted Soliton a three-month ‘limited exclusivity’ offer. The offer would see Soliton with exclusivity until after RFG’s October 31 debt deadline.

With the franchisor’s debt sitting in excess of $260m, an impending Michel’s Patisserie class action lawsuit could be a monumental blow.