The company behind Michel’s Patisserie and Gloria Jean’s is facing the threat of another class action from shareholders hit by the impact of failures within its franchise model.

Law firm Phi Finney McDonald is seeking investors who bought shares in Retail Food Group between April 2017 and the end of February 2018 and lost out when media reports of mistreatment of franchisees caused the company’s share price to plunge in December 2017.

RFG shares fell sharply again in March 2018 when the company posted a half year loss of $88 million due to writedowns, and flagged the closure of up to 200 stores.

RFG shares traded at $4.40 prior to the December 2017 media reports, and on Thursday closed at 86 cents.

The potential Phi Finney class action, which is also backed by litigation funder IMF Bentham, alleges RGF failed to disclose to the market that its franchise model had material financial risks and the networks were deteriorating.

It also alleges the company’s profit forecast made in August 2017 lacked reasonable grounds.

Phi Finney McDonald Director, Tim Finney, said RFG shareholders should be angry.

“”RFG’s board knew about critical defects in the franchise model and the financial crisis afflicting its franchise networks. However, RFG investors only discovered these issues from media coverage in December 2017,” he said.

Bannister Law is also investigation two potential class actions against RFG, one on behalf of shareholders and another for franchisees, while Maurice Blackburn is also looking into a potential action for shareholders.