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Background

Since its inception, the Fair Work Ombudsman (FWO) has received a number of requests for assistance from Pizza Hut employees. Between 1 June 2010 and 6 January 2016, the FWO completed 144 requests for assistance involving a workplace dispute in relation to Pizza Hut franchisees, recovering more than $91,000 of unpaid monies.

Further to this, media coverage in November 2015 alleged underpayments of Pizza Hut workers. One media article alleged drivers were underpaid minimum hourly rates (in some cases as low as $12 per hour or $6 per delivery with drivers required to provide the car, fuel, vehicle maintenance and insurance) and some were improperly engaged as independent contractors when they were more likely to be employees.

As the allegations contained in the media reports were consistent with the FWO’s concerns about levels of compliance, the FWO initiated a compliance activity (the Activity) into Pizza Hut’s workplace arrangements with its delivery drivers.

During the Activity, Pizza Hut Australia (the franchisor) was a division of Yum Restaurants [ACN 000 674 993] and based in Frenchs Forest, NSW. Yum Restaurants is a foreign-owned proprietary company first registered in Australia in 1969. It is an Australian subsidiary of Yum! Brands.

Pizza Hut was operated under a 100% franchised model with approximately 270 dine-in restaurants and take away outlets across Australia. Under the franchise agreement, it is understood franchisees pay 6% of their total sales to Pizza Hut.

On 6 September 2016, a subsidiary of Yum! Brands, Pizza Hut Restaurants Asia Pte Ltd, entered into a master franchise agreement with Pizza Pan Group Pty Ltd (Pizza Pan Group) under which Pizza Pan Group will act as the master franchisee for Pizza Hut in Australia.

Pizza Pan Group is owned by Allegro Funds Pty Ltd [ACN 128 866 053]. Yum Restaurants’ existing franchise agreements have been transferred to Pizza Pan Group.