It's an issue that's raged for years. Franchisees at food and drink outlets, in particular, saying they can't make a living because their franchisors are abusing them.

"Already the company takes everything, grab every single dollar from us," Melbourne-based Michel's Patisserie franchisee, Henry Wong, bemoaned.

Mr Hong thought he was securing his financial future and a better lifestyle when he invested in a Michel's Patisserie at Knox City in Melbourne's east.

Instead, he said, it's been a constant battle with Retail Food Group, the owners of the Michel's Patisserie brand.

"I wasted nine years here. And not only destroy the business, but my health and mentally and physically and financially. Totally destroy my life," Mr Hong told the ABC.

But Mr Hong's story is one that is becoming all too familiar in the franchising industry.

'Cannot make a profit'

Franchisees have been smashed by high costs and, in their desperation to make ends meet, many underpay their staff.

Think 7-Eleven, Domino's Pizza and Caltex.

"This all comes down to the fact that they cannot make a profit off their franchise," Maddison Johnstone from Franchise Redress explained.

"They are often sold a dream, and the reality of their outlet quickly becomes apparent to them."

Franchise Redress represents franchisees in disputes with franchisors and has exposed a lot of the dark side of the franchising industry.

Ms Johnstone said Retail Food Group, which also owns brands including Donut King, Gloria Jeans and Brumby's Bakery, is the worst she's encountered.

"We haven't seen so many franchisees so willing to share their story, and they have such horrible stories as well," she said.

"Losing hundreds of thousands of dollars, marriages being broken up."

Franchisees at the mercy of Retail Food Group's supply chain

Mr Hong spent nearly half a million dollars to acquire his Michel's Patisserie business.

He ended up having to take a second job to keep a roof over his head because of a whole host of costs he was not expecting.

"The franchise fee started at 3 per cent and is now 10 per cent and it's based on total sales," he said.

Michel's Patisserie franchisee Wayne Hong said his life has been "totally destroyed". ( ABC )

Mr Hong said the price of cakes from Retail Food Group went up 30 per cent but the range and quality were cut.

He said deliveries were also slashed from daily to twice a week, meaning his customers were no longer eating fresh cakes.

Mr Hong is forced to buy all his supplies from Retail Food Group, which has an iron-clad control of the supply chain.

As the company noted in its latest annual report:

"As RFG's transformation into a vertically-integrated global model matures, we will continue to see an enhanced and diversified revenue base."

University of New South Wales' franchising expert Jenny Buchan said it's a system biased against franchisees.

"There's no incentive for the franchisor to go and look for better deals for the franchisee," Professor Buchan said.

"They know that their supply chain is going to deliver the coffee and deliver the flour and deliver the delivery systems, so they have no incentive at all."

With control of the supply chain, Retail Food Group can charge whatever it wants, as Mr Hong knows only too well.

"I went to the factory and bought a box of yo-yo biscuits. It's $15, including GST. Retail Food Group gives us, on their system, $65 plus GST, for biscuits from the same factory."

Pain extends to Retail Food Group shareholders

While franchisees like Mr Hong may not be happy, Retail Food Group also has shareholders to please — and the company's accounts tell an interesting story.

In the last three full years it's added 704 new franchises, and with the average sale price being hundreds of thousands of dollars, it's been a nice little earner.

In evidence that supports claims its franchisees are being gouged, Retail Food Group corporate revenue (fees from franchisees) was up 27 per cent in 2017, while sales revenue from those franchisees' outlets was down 8.4 per cent.

"Franchising should be about choosing the right franchisees, having a great product or service, and helping those franchisees deliver it in the most profitable way possible, leaving some profit with the franchisees," Professor Buchan said.

"Not ripping profit out of the franchisees to satisfy the public shareholders."

However, Retail Franchise Group shareholders are now suffering too.

The share price fell 60 per cent in the last three months as the company took big write-downs that pushed it into the red, prompting the announcement it would close up to 200 stores.

Lawyers are touting a class action.

Retail Food Group's share price has tumbled after taking write-downs and announcing store closures. ( Supplied: Thomson Reuters )

Franchise Redress's Maddison Johnstone said the company's model of selling as many franchises as it can is guaranteed to bring pain.

"Not anybody can run a business. You shouldn't be selling to vulnerable people who you probably know won't do a good job in running it. "

For people like Mr Hong, the debts and the stress continue to pile up.

"My life, it's totally destroyed by them. And also I couldn't believe it's happened in Australia."

Now franchisees are hoping a new parliamentary probe will crack down on the industry once and for all.

A Senate inquiry into the effectiveness of the franchising code of conduct will report its findings by the end of September.

The ABC is awaiting a formal response from Retail Food Group.