Allan Fels said "vigorous" enforcement action from all relevant agencies was required to clean up the sector. Credit:Alex Ellinghausen What the franchisee didn't know was that the caller, Jon, a Chinese student on a visa, was working undercover for Fairfax Media. This kind of visa fraud has emerged as part of a wider investigation by Fairfax Media into country's biggest pizza chain that has uncovered a business model in which many franchisees struggle to survive and workers are underpaid. The price varies from $30,000 to $150,000 depending on the visa, the job on offer and the worker's nationality. For franchisees engaging in this illegal practice the scheme offers lucrative sideline revenue to prop up low-income stores.

Domino's worker Tosif Varsi faces imminent deportation after the franchisee he was working for lost his store. Credit:Michael Fraser "This is gross exploitation that extends beyond underpayments," says Professor Allan Fels, who chairs the Migrant Workers Taskforce. He believes the sponsorship arrangements indicated an "alarming" extent of abuse. Domino's worker Azrael Yin. No issue

Domino's controls one of the biggest franchise networks in the country, with more than 600 stores employing more than 14,000 workers and selling around 1 million pizzas a week. In a statement the pizza giant says visa fraud is not an issue for the company. I will say straight that we want to sell this sponsorship. Eric "Domino's has not received any complaints of visa fraud," it says, adding the company "has no place for those who put self-interest above the interests of our employees and the community". The pizza giant launched an investigation on Sunday after it was informed that Fairfax Media had obtained a phone recording of a current Domino's franchisee asking for money in exchange for sponsorship at a Domino's store in regional Queensland.

Jon requested his full name be withheld for fear of retribution. He agreed to go undercover to help expose how easy and blatant this highly illegal activity can be. The phone call caught the franchisee red-handed spruiking sponsorships in return for big dollars in return for a job as a store manager, paying $50,000 plus at his Domino's store just out of Cairns. "And this is not include any other fees like lawyer fees, 'cos we have our own lawyer, we don't want a lawyer that we don't know, and this cost is not include in the price, you need to pay it yourself," the franchisee says. Offer denied The franchisee's name is Bohai Shangguan, known also as "Eric". He was behind an ad on ozYoYo, a website for foreign nationals looking for jobs and sponsorships in Australia at stores such as Domino's.

When Fairfax Media spoke to Shangguan he admitted to offering a sponsorship, but denied asking for money. "We just need someone to run the shop ... we don't do those things," he says. It is illegal to ask for, receive, offer or provide a benefit for visa sponsorship. The Department of Immigration said it takes breaches of visa obligations very seriously – penalties include two years' imprisonment and fines of up to $324,000. Jon tells Fairfax Media it is not unusual for franchisees to offer sponsorship for a bonus or payment. "It's all about money," he says. "They know international students want a visa and many families in China will put together money to pay for the sponsorship for their children."

Not all franchisees offer sponsorships and not all franchisees that do sponsor workers want money for them. But it does give unscrupulous franchisees a powerful weapon to control workers. Workers claim Fairfax Media spoke to a number of workers on visas from China and India who agreed the practice was common. Most were too afraid to speak publicly. Azrael Yin, a former store manager at Domino's, says many franchisees sell sponsorships.

"I know of one person who is sponsored and work 60 hours a week and gets paid for 40 hours," he says. Azrael says another franchisee sponsored two foreign workers, charging them tens of thousands of dollars, only to withdraw the offer. "One of the workers went back to China after the rip-off," he says. Consumer advocate Michael Fraser and his colleague Maddison Johnstone recently visited 70 Domino's stores across the country and found a number of stores filling store manager positions with permanent residency sponsorships. "It can ensure a period of servitude for fear of retribution," Fraser says.

"Franchisees know if they ask the manager being sponsored to edit people's time worked to save on wages, they will feel obligated to do it for fear of losing their sponsorship." If workers complain, their sponsorship is likely to be cancelled, inevitably leading to deportation unless a new sponsor can be lined up. Deportation imminent Tosif Varsi, a former Domino's store manager, faces imminent deportation after the franchisee he was working for lost his store and his sponsorship deal eventually fell apart. "I feel like a loser for not getting my sponsorship," he says.

"I tried so hard. I ... was treated bad with other workers calling me Indian swear words and talking in fake Indian accents," he says. "I kept working there but it made me depressed but I had no choice because I needed the sponsorship." He was also underpaid due to a "mistake" by the new franchisee. Tosif is desperately trying to find someone to sponsor him as he counts down to deportation. "I have just 10 days now to find my way to stay in Australia, I am so desperate," he says. In a Domino's store in the Sydney suburb of Darlinghurst another worker was so distressed by what he experienced he wrote a personal plea to chief executive Don Meij in June 2015.

He described a scam where he was told to accept wages for other workers on foreign student visas, so they didn't breach their visa conditions by working too many hours. "[I've] been forced to receive salary for student employees as my wages and return them in cash to ensure they are compliant to immigration student laws," he says. Model operation Domino's says it investigated the complaint and took "appropriate disciplinary action" against responsible staff. The Darlinghurst store should be a model operation. It wasn't owned by a franchisee but instead owned and run by Domino's head office. As such it benefited from a subsidised royalty rate which should have also made it more profitable.

The worker, who has since returned to India, sent a shopping list of complaints to Meij and says the situation had taken its toll on his mental health. "I have on a regular basis if not every single day have been asked to work for at least 1 - 2 hours without pay...I have not been paid my double pay as per union agreements and legislations. Also, sometimes my clock-in hours have changed without my knowledge. I have been very depressed and for the last 2 months and have been admitted to St Vincent Hospital," the employee wrote. He claimed rosters were being tampered with and that he was being forced to deliver pizzas even after he had finished his shift. He also says he was not being paid for meal breaks and was told to clock in as a driver despite working in another role. Domino's says it conducted an investigation into his position and underpayments were rectified. Documents seen by Fairfax show he was repaid almost $7000 in unpaid wages and super.

Zero tolerance Domino's won't say how many suspected instances of underpayment it has come across in its network but Fairfax Media has compiled a list of hundreds of employees from Victoria, NSW, Queensland and South Australia where Domino's' own audits found potential fraud and underpayment. The company says it investigates every allegation of underpayment, but says many of these cases ultimately turn out to be found to be "a simple misunderstanding by an employee of their entitlements". In a statement released on Saturday the company said it took a zero-tolerance approach to wage fraud and attributed recent criticism to terminated franchisees some of whom it said "told Domino's they wanted more favourable termination terms, or would take their grievances to the media".

Loading Migrant workers can be seen as cheap labour and are particularly vulnerable to unscrupulous employers. A report by Western Community Legal Centre – a community organisation that provides free legal help in Melbourne – found newly arrived migrants experience high levels of exploitation in the workplace. "Underpayment of wages or entitlements is the most common problem that clients present with at our service ... nearly half of our clients received advice about sham contracting, underpayment or non-payment of their legal wage or other entitlements," the report says.