Some Oporto, Red Rooster and Chicken Treats outlets are at risk of bankruptcy because of onerous costs and other unfair business practices by their parent company, according to claims made to a Senate inquiry.
A group claiming to represent fast food chicken franchisees says they are struggling due to the crippling cost of supplies, loyalty programs and promotions levied by Craveable Brands, as well as poor marketing and stores being located too close to each other.
"Therehavebeenrecentinsolventfranchisees, RedRooster Mt.PritchardandRedRoosterParklea," the Franchisee Association of Craveable Group says in its submission.
"Therearemanymoreonthevergeof bankruptcy."
The group's submission claims franchisees are gouged for goods including plastic cutlery, garbage bags and bottled water.
It says Red Rooster franchisees' cost of goods is 38 per cent, which is higher than the 32 per cent and 33 per cent it estimates for Subway and KFC franchisees.
Craveable Brands responded by saying the Franchisee Association of Craveable group represents "a small group of store owners" and that its assertions to the inquiry were false.
Friday was the final day for franchisees and other stakeholders to lodge claims with the federal parliamentary inquiry into the nation's scandal-ridden franchise industry.
The inquiry was set up following a string of allegations involving major firms including Donut King owner Retail Food Group, Domino's Pizza, Caltex and 7-Eleven.
Former Retail Food Group credit controller Elke Meyer made a sober submission, claiming a large number of RFG's Australian Gloria Jean's franchisees are discontent and stressed over outstanding debts.
She said one under-pressure franchisee told her that she sat on the floor one night hugging her husband and two sons after her husband decided it would be best that he killed himself so they could use his life insurance.
"There was an overwhelming sense of hopelessness among a lot of the franchisees I dealt with, but this instance was the most extreme," Ms Meyer's submission said.
"I immediately took this situation to my manager."
She said it took some time before action was taken to help the franchisee, and that she learnt many Gloria Jean's franchisees felt they were lied to about store profitability before buying in.
The CEO of gardening franchise Jim's Group said in a submission he believes the Franchising Code does almost nothing to protect franchisees.
Jim Penman, the founder of Australia's largest franchise chain, said the code allows vulnerable people to be "ripped off by unscrupulous operators."
"The whole system is no more than a feeding trough for lawyers," Mr Penman's submission said.
"The disclosure document is so densely legalistic that even lawyers and franchising executives have trouble understanding it."
