RFG's shares shed 7 per cent to $2.65 on Monday, their lowest value since August 2012, after Fairfax Media reported claims of wage underpayment within its franchisee network.

Shares in the company behind the Gloria Jean's, Donut King, Brumby's Bakery and Crust Pizza chains have fallen almost 40 per cent in little over a week after Fairfax Media first revealed that the company's sharp business model was driving franchisees to the wall.

RFG had a market capitalisation of $830 million at the end of June, but that has fallen to $487 million with a free-float market capitalisation of $390 million, which is the lowest of any company on the S&P ASX 200 index according to Bloomberg data.

That puts RFG at risk of S&P removing it when it next rebalances the index on March 16.

Removal from the index can put further downward pressure on a struggling stock's share price, as index funds, which match S&P's index stock-for-stock, and shareholders that only invest in top-200 companies sell out.

S&P list stocks in the benchmark index every quarter based on the their six-month average float-adjusted market capitalisation. Stocks must also have relative liquidity of 50 per cent or higher.

Macquarie market analyst John Conomos said stocks with free-float market values below $570 million faced removal, based on the most recent rebalance announced on December 8, and which came into force on Monday.

"This will not guarantee removal as there needs to be a suitable stock to replace one being removed but there is a high chance of removal," Mr Conomos said.

He said RFG's market cap would be higher when based on a six month average, but that it clearly had a downward trajectory.

Troubled department store Myer had the second lowest market value on the ASX200 on Monday at $531 million.

Mr Conomos warned in a report last month that Myer was a candidate for removal from the index, along with Asaleo Care and three companies that were dropped on Monday: FlexiGroup, Japara Healthcare and Regis Healthcare.

CMC Markets chief strategist Michael McCarthy said delisting created selling pressure, but how much a share's value fell depended on how widely the stock was held, and how much warning there had been that it would be removed.

He said funds that did not match the index exactly concentrated their investment in its top end, meaning stocks coming close to delisting were already a discretionary part of their portfolios.

"Those funds that are exactly index funds, it's a reasonable assumption is that most of them will be transacting on that day [of removal]," Mr McCarthy said.

"But... there are active managers who are not tied to the index and might be interested in that stock, and might see that as a liquidity opportunity."

Index fund giant Vanguard Group has a stake in Myer (3.3 per cent) and a slice of RFG (3 per cent).

RFG released a statement on Monday saying reports of wage

fraud in its network did "not accurately reflect its current business, proactive efforts to better assure employee entitlement compliance and the levels of support we provide to franchisees".