Pyramid schemes have many shapes and forms regardless of it being on the ASX - not sure how RFG business model isn't exactly like a shady Multi-Level Marketing operation? I.e. Sell highly inflated products, charge for training workshops/equipment, find more participants with the marketing money from existing parties, have rebates with suppliers etc.
This whole thing was built upon churning, ingredient/supplier rebates and high franchisee fees unfortunately - why else would you buy a collection of highly matured & dwindling popularity brands? Previous management had a clear mission to extract high dividends for themselves and shareholders at the direct cost of Franchisee & Brand success - a fair majority of franchise chains unfortunately operate this way at head office level.
Only thing holding this up is the arbitrary Goodwill value and with Lease liabilities rolling in, liquidation has to be the only option. Businesses like this do deserve to fail as to warn other Franchisors to shape up, bring about needed Franchise industry regulation and show Franchisees they need to obtain proper Due Diligence advice before purchasing into these scams.
RFG Price at posting:
16.0¢ Sentiment: Sell Disclosure: Not Held
