BAO2203: Corporate Accounting - Retail Food Group Report Analysis

This report analyzes the Retail Food Group (RFG), addressing key questions related to its financial performance and strategic direction. It examines RFG's marketing strategies, including new product rollouts and loyalty programs, and assesses their effectiveness. The report delves into the franchisor-franchisee relationship, exploring the application of Agency Theory and Exchange Theory to understand the dynamics and potential challenges within the franchise model. It also provides recommendations for RFG to improve its performance, focusing on data-driven customer views and improved business practices. The analysis covers RFG's share price, profit trends, impairment charges, debt covenants, and the application of the going concern principle. The report concludes by summarizing RFG's current initiatives and their potential impact on investors, shareholders, management, and customers, highlighting the company's efforts to adapt to market changes and build new norms within the industry. The provided solution is a report that answers the questions from the assignment brief which is a report on the accounting for franchisor/franchisee relationships focusing on the case of Retail Food Group (RFG). The report analyzes the share price, profit, impairment charges, debt covenants, and strategies of the company.

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Table of Contents
Question 5........................................................................................................................................3
Question 6........................................................................................................................................3
Recommendation.............................................................................................................................4
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Question 5
The basic marketing strategy adopted by the Retail Food Group is to continuously roll out of a
raft of the new product and the marketing strategies. This helps to increase the revenue
potentially. In order to target the customer growth a new coffee and loyalty program has been
established. In any case, controllers, including Australia's corporate cop, the Australian
Securities and Investments Commission (ASIC), have promised to investigate the issues
distinguished in a parliamentary request report that was searing of the Retail Food Group (RFG)
and required a between office examination concerning the organization and its money related
reasonability (Retail Food Group, 2018).
Serious challenge and changing customer patterns, together with declining retail execution has
significantly added as a contribution in challenging the operations of the conditions. This has
been especially apparent among shopping focuses where high inhabitance costs just as changes
in tenure blends and pedestrian activity are critical supporters of RFG's local system execution.
RFG is focused on persistent improvement and has found a way to improve its own business
frameworks to all the more likely help franchisees. These new procedures are notwithstanding
those endorsed under the Franchising Code of Conduct, with the point of reclassifying best
practice and restoring RFG as an innovator in the diversifying business (Wiśniewska,
Czernyszewicz and Kałuża, 2019).
The new campaigns have also been included and aligned with the popular brands such as
NESTLE, Kit Kat chiller campaign. The strategy adopted by the company is of regular nature
and the company needs to figure out the other alternatives to keep the existing customers equally
happy as the new ones. RFG shall majorly focus on the improvement of the point of sales. In

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terms of the packaging the company can improve itself with the new designs that will definitely
attract a large mass (Khadem, 2019). The strategies are effective to an extent and the company
must move forwards with new business solutions in order to cater the needs of the customers in
the better manner. This is also because the competition is intense and the company needs to work
fairly as well smartly.
Question 6
The franchise-franchisor relationship can be understood with the help of two theoretical
perspectives which is Agency Theory and Exchange Theory. The strategic management demands
how the leadership shall be governed and determines what the company shall do and shall not.
Further the decision making is called making the trade-offs and it has much to do with the
Agency theory in contrast with FFR. Under the Agency theory, it establishes a broad perspective
and pertaining to contractual relationship between the franchisee and franchisor. The contract
helps in protecting of the financial interests of both the sides and also sets the criteria for
operating the franchise. Another theory is the application of the Exchange theory which is based
on the interaction of the people. There are strategic considerations of a franchise that are both
internal and external when looking at incentives and participation (Khadem, 2019).
The franchisee code of conduct followed by Retail food group included the more stringent
external independent advice, the transparency in sales and better franchisee resale, screening of
the potential franchisees and the new try before buy programs have lured the number of the
customers. This program was initially started for a period of 6 months before deciding whether to
proceed with the purchase of the franchise (Retail Food Group, 2019).

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The franchisee has specific incentives based on the contract written by the franchise. The
exchange relationships are maintained and created when the relationships tends to be attractive
for both the parties. The higher prices and a lower degree of customer service is what the
franchisees get in order to compensate for the liability of fees and royalties to the franchiser
(Retail Food Group, 2018). The contract has several elements, including an annual franchise fee
and royalties on sales due to the franchiser. The dual distribution model of Agency Theory can
be taken to the next level for including the credible communication of the franchise brand equity.
This is also necessary ass the system of franchise is dependent on the various levels and the trust
factor between the franchisor and the franchisee. Hence, the opportunity cost is transferred to the
forefront platform of the franchising system (Shaikh, Sharma, Vijayalakshmi and Yadav, 2018).
Recommendation
From the above analysis it can be recommended that the company like Retail food group shall
bring in new strategies and the policies to give a new outlook to the company. There shall be an
equalization should be struck between long term vision and a guide for digitizing promoting, and
present moment prioritization. Then there are small terms projects and wins as well where the
need to attempt to construct top tier undertaking promoting stages yet regardless of the business
operations are required (Cameron, 2017).
Retail food group is in exceptionally aggressive market, nourishment is extremely close to home,
so the company needs to ensure that they continue conveying the correct encounters for our
clients. Apart from that the data driven customer view marketing shall be adopted where the
single customer can have access to all the brands of the Retail Food Group. The ability to share
the data from one customer to another would only build their goodwill. The right metrics are also
required on account of Retail Food group, whether it is equivalent to visiting a site and making a

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request about getting to be one of RFG's brands franchisees, or change online when a buyer
arranges a pizza. The best practices are now being taken by the Retail food groups, beyond the
scope of the Franchising code of conduct and the company must aims to protect our franchisees
in both the existing and prospective manner (Dixon-O’Mara and Ryan, 2018).
Conclusion
The above analysis defines how the earlier practice of the Retail Food group was and the best
practices that are being implemented by the Retail Food Group now. Further the position of the
company in respect to the share price movements and the share price have been also been
playing a major factor in deciding the role of the enterprise. Above all the initiatives taken by the
Retail food group will eventually be helpful for the investors, shareholders, management as well
as the customers as well. The new data driven technology will not only help the retail food group
in making the customers base larger than earlier but it will also be useful in diversifying the
interest of the customers towards the other products. Moreover, like many of the peers of the
RFG, the more skills and the ability-in-house is required by the company in order to have the
improved responsiveness and agility. Hence, from the overall scenario it can be stated that RFG
is building new norms and is walking on the right direction in comparison to the previous years
and these steps will be beneficial for the employees as well.

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References
Cameron, N. (2017) 7 steps Retail Food Group’s digital chief is taking to transform marketing
[Online] Available from https://www.cmo.com.au/article/615122/7-steps-retail-food-group-
digital-chief-taking-transform-marketing/ [Accessed on 9th September 2019]
Dixon-O’Mara, C. and Ryan, L., (2018) Energy efficiency in the food retail sector: barriers,
drivers and acceptable policies. Energy Efficiency, 11(2), pp.445-464.
Economics, I.H.S., 2015. Franchise business economic outlook for 2015. IHS
Economics,“Franchise Business Economic Outlook for.
Khadem, N. (2019) Retail Food Group hoses down concerns it is in financial strife, but
regulators could start circling [Online] Available from https://www.abc.net.au/news/2019-03-
15/rfg-hoses-down-concerns-it-is-in-financial-strife/10902194 [Accessed on 4th September
2019].
Retail Food Group, (2018). Significant Accounting Policies [Online] Available from
https://www.rfg.com.au/wp-content/uploads/2019/02/RFG1H19FinancialStatements.pdf
[Accessed on 4th September 2019]
Retail Food Group, (2019) FY19 Results & Update1 [Online] Available from
https://www.rfg.com.au/wp-content/uploads/2019/09/ASXAnnouncementannualresults.pdf
[Accessed on 9th September 2019]
Shaikh, A., Sharma, D., Vijayalakshmi, A. and Yadav, R.S., (2018) Fairness in franchisor–
franchisee relationship: an integrative perspective. Journal of Business & Industrial
Marketing, 33(4), pp.550-562.

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Wiśniewska, M., Czernyszewicz, E. and Kałuża, A., 2019. The assessment of food safety culture
in small franchise restaurant in Poland. British Food Journal.