Flood-stricken franchisees face uncertain fate

Flood-stricken franchisees face losing their businesses, with the Retail Food Group admitting that some of its Queensland outlets may not reopen.

RFG, which owns Brumby’s, Donut King and Michel’s Patisseries, says 108 outlets were closed in Queensland due to floods.

Eight Brumby’s outlets remain closed due to direct flood damage or the closure of shopping centres in which they are located.

According to RFG, the immediate future of each of these outlets is “presently the subject of further assessment.”

“In certain instances, it may well be determined that rectification works in order to facilitate recommencement of trade will be uneconomical,” it says.

In addition, the RFG says it does not discount the potential for permanent outlet closures “in circumstances where the franchisees concerned are incapable of meeting financial obligations otherwise owed by them.”

“At a corporate level, RFG anticipates the loss of franchise service fees and other revenue in the immediate and medium-term as a consequence of the floods and their affect on the company’s franchise networks.”

RFG chief executive Tony Alford says he expects the floods will continue to disrupt normal trading, with many franchisees experiencing long periods of revenue reduction.

“In some cases, this may result in a permanent reduction in retail sales within those communities worst affected by floods,” Alford says.

“This may have long-term adverse affects for those franchisees concerned.”

However, Alford predicts some stores will achieve higher sales due to increased demand for necessities and stock shortages among supermarkets.

Meanwhile, Prime Minister Julia Gillard has announced the formation of a business task force to help Queensland recover from the floods.

Gillard has decided to bring together 10 of Australia’s leading businesspeople to generate corporate support for the recovery effort.

“Already corporate Australia has been tremendously generous. But given the scale of this disaster, we need to do more,” Gillard says.

The group will be chaired by Treasurer Wayne Swan and will meet with Gillard for the first time next week.

In addition to the 10 selected businesspeople, Swan will be joined by Assistant Treasurer Bill Shorten and Queensland Treasurer Andrew Fraser.

For three months, the group will focus on finding corporate donors to help flood-stricken businesses before reviewing whether it needs to continue its work.

The members of the taskforce are:

Graham Bradley – Business Council of Australia president

Brian Flannery – White Energy CEO

Lindsay Fox – Linfox chairman

Wayne Goss – Deloitte Touche Tohmatsu chairman

Jock Laurie – National Farmers Federation president

Catherine Livingstone – Telstra, Macquarie Bank, WorleyParsons director

Michael Luscombe – Woolworths CEO

David Michaelis – Australian Chamber of Commerce and Industry president

Heather Ridout – Australian Industry Group CEO

David Stewart – Leighton Holdings CEO