390 new RFG stores in latest rollout
RETAIL Food Group is forging ahead with plans for a rapid 390-store rollout of its Donut King and Crust Pizza brands in the United Kingdom, even as it struggles to find a viable buyer for them.
Following the success of Britain's first two Crust outlets, which have been well-received in Liverpool, UK media has reported plans to open a combined Donut King-Crust outlet in downtown Essex.
"It will be the first of hundreds set to open in the next 10 years after a franchise agreement was agreed for the UK, reported Essex Live.
"Crust, a gourmet pizza kitchen, and Donut King, royalty in desserts, will soon be across the country with 250 pizza and 140 doughnut outlets set to open in the first decade.
"The two companies are owned by Retail Food Group Limited, (RFG) who are headquartered in Australia."
RFG makes an initial fee selling its international master franchise licences, and also takes ongoing royalties as well as renewal fees if a franchisee extends the agreement.
A transfer fee is also charged when a master franchisee transfers the agreement to another franchisee.
The company did not address questions of whether it had provided the UK master franchisee any advice on growing the brands sustainably and avoiding problems highlighted in a scathing joint parliamentary inquiry, which recommended past and present bosses be investigated for possible insider trading and other crimes.
RFG also declined to detail the amount of initial and ongoing fees it received from its international master franchise licensing.
The company described the numbers touted for the UK rollout as "likely to be a projected development quota".
The company said combining Donut King and Crust in one store in the UK was part of that franchisee's strategy, and was currently a one-off.
"As such, RFG has no current plans to roll out such a model, however will monitor the success of the Master Franchisee's growth in this market," a spokeswoman said.
The Southport-based franchisor is relying on its banks to provide ongoing flexibility in its loan agreements, and said it was looking to sell assets to help secure its viability.
Talks with a potential buyer for Donut King and Crust, as well as fellow brand Pizza Capers, collapsed last month after RFG said the proposed price for the chains was too low.
RFG had valued its Donut King, Pizza Capers and Crust brands at $87.34 million after lease liabilities of $45.79 million.
The company has said its profitable Dairy Country business is also on the market.
RFG's share price has been in the doldrums since December 2017, after reports of a destructive franchise system were widely publicised.
RFG was in the headlines for the wrong reasons again earlier this week after it admitted telling franchisees to sell food that was past its expiry dates.
RFG shares rose 2.5 per cent to 20.5c yesterday.