Just Gotta Go? Oporto And Red Rooster Close To Bankruptcy
Store owners of Red Rooster and Oporto restaurants across Australia say that they are on the verge of bankruptcy.
They claim high costs and operating restrictions forced upon them by the company which controls both fast food chains is making it difficult to survive.
The complaints are part of a submission from franchisees to the Senate's inquiry into the Franchising Code of Conduct.
There are around 570 Red Rooster, Oporto and also Chicken Treat restaurants around the country operated by a company called Craveable Brands which is owned by a private equity firm called Archer Capital.
The Franchisee Association of Craveable made a submission to the inquiry claiming that franchisees are struggling.
The franchisees claim that, "Many franchisees are in distress due to the poor business model of Craveable"
The submissions revealed that Red Rooster in Mt Pritchard and Parklea had already gone bust.
"There are many more on the verge of bankruptcy,"
"The business model needs to be questioned and rectified prior to more franchisees becoming bankrupt."
The franchisees say there is an issue with Craveable's two brands Red Rooster and Oporto both operating "very similar businesses" selling chicken.
"The common complaint for Red Rooster chicken has been 'it is the same chicken, which is available at the local supermarket for half the price',"
"[But] a simple move like adding flavours and sauces cannot be done because that competes directly with Oporto, Red Rooster's sister brand."
The franchisees also say that Craveable opens both brands within close proximity to each other causing the franchisees to be competing with one another.