Analysis of Case Study 1

Running head: ANALYSIS OF CASE STUDY 1
Analysis of Case Study 1
Name of the Student
Name of the University
Author Note

1ANALYSIS OF CASE STUDY 1
Table of Contents
1. Identification of the Problem in the Given Scenario..........................................................2
2. Analysis of the Key Issues..................................................................................................3
3. Alternative Solutions to the Problems................................................................................3
4. Advantages and Disadvantages of the Various Possible Solutions....................................4
5. Selection of the Best Solution.............................................................................................4
References..................................................................................................................................5

2ANALYSIS OF CASE STUDY 1
1. Identification of the Problem in the Given Scenario
The immediate problem that can be identified in the given scenario that is people
signing up for franchises under the banner of the Retail Food Group or RFG based in Gold
Coast in Queensland, are incurring huge financial losses. The once expanding list of stores
under the RFG umbrella soon began to reduce in length as many of these stores were being
sold off at massive discounts or were being considered as ghost stores. Although RFG has
experienced phenomenal growth ever since it was listed on the ASX in the year of 2006, this
immense growth rate has come at a cost that has proven to be very huge for the franchisees.
Yet the problem that has occurred is largely due to financial mismanagement by franchise
owners. Systematic wage fraud is something that the franchise owners had been partaking in
for quite some time. The underpayment of workers from overseas who were hired by the
franchises on holiday contracts and the drawing up of fake employment contracts by
franchise owners which in turn led to a huge slump or decline in the balance sheet of RFG. A
warning was issued by the chairman of RFG at a company meeting recently whereby he
stated that efforts needed to be made to ensure that franchises were paying all of the staff
members accurately and in a timely manner. Rising labor costs, crippling fees and high food
imposts as well as high rent have all made the situation much worse for RFG franchises. The
franchises on their part claim that they do not get as much support as they would like to from
the head office mainly because RFG is seen to cut costs quite frequently for preserving
margins. Bad advertising, poor quality of products and little or no product innovation has led
to the financial problems of RFG franchises being significantly magnified. Moreover, some
stores have even manipulated sales in order to prevent the royalties that are charged by RFG
following each and every transaction. Although this problem is something that RFG has tried
to manage by recruiting mystery shoppers, hiring surveillance firms and conducting regular