Retail Food Group's shares have gone into freefall after the cafe and bakery giant issued a profit downgrade and admitted franchisees were leaving its network.

RFG's shares plunged 25 per cent to $1.98 on Tuesday, after the company said it expected its first-half statutory net profit to fall to $22 million, from $33.5 million in the same period last year.

Retail Food Group shares have fallen another 10 per cent. Credit:Jessica Shapiro

This follows a 7 per cent share price slide on Monday after Fairfax Media reported allegations of widespread wage underpayment in the company's network.

The stock has now fallen 55 per cent since December 8, when Fairfax published the first of several articles revealing that RFG's business model was driving some franchisees to the wall.