3.2 RFG expected behaviour towards the stakeholders
The stakeholder theory assumes that corporations have an ethical and moral obligation towards all its stakeholders (Wasieleski & Weber, 2017). This bears in mind that each stakeholder has different interests. As such, the RFG should act responsibly towards each stakeholder meeting their specific interests. Thus, the following actions are expected for these stakeholders.
3.2.1 Franchisees
As the purchasers and maintainers of the RFG stores, the Group needs to meets its contractual obligation first by acting in good faith. This means that before allowing the potential franchisees to sign the agreement, they should disclose all the financial information about the company’s true performance. In addition, the company should hold periodic meetings with its franchisees to learn of their grievances and suggestions of how to improve the franchises
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Typically, customers stop purchasing products when the quality is bad or if there is lack of innovation, and they look for alternatives (Duska, 2007). This suggests that the RFG does not pay too much attention to the quality and thus, consumer end products.
3.4 The short and long-term consequences of RFG’s approach towards the Franchisees
3.4.1 Short-term consequences
The short-term consequences of RFG’s approach are massive sale of the stores or abandonment. As the article reveals, most franchisees are selling their stores, but people do not want to buy them as they incur losses. This may lead to abandonment as is the case with some franchisees. This will eventually lead to losses for the company and a decline of the share price.
3.4.2 Long-term consequences
The short-term consequences will lead to the long-term consequences. Most of the brands will be wiped out as they are sold or abandoned. This will lead to a decline in share prices and eventually lead to bankruptcy of the group.
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