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Minister for Ethnic Affairs Chris Carter has slammed the firm Green Acres for being "devious" and "ruthless"in its handling of victims of the alleged Keith Lapham scam.
The minister said Green Acres was also "incredibly exposed" for its part in its former area manager's $5 million sale of
about 200 non-existent ironing franchises to investors who paid between $21,000 and $25,000 each.
The defrauded franchisees are mainly Chinese and Indian immigrants who had borrowed money to buy the businesses.
Many now have no income to repay the debts.
Seven members of Franchise Watch, the group set up to represent the victims, met Mr Carter at his Te Atatu electorate office on Saturday and received advice from the minister to get collective legal representation.
"Some of these people are in dire straits," Mr Carter said. "My advice to them was to get a lawyer working for them ... and that collective legal action was the most effective approach."
He said Green Acres was attempting to split the defrauded franchisees up as its "strategy of reducing the potential pool of people they're going to eventually have to pay out to".
"They are being quite devious in trying to split the group, and they also, I understand, tried to separate those who have contracts that are already signed and those who have paid and not have the paperwork yet.
"They are, in my view, being quite ruthless in trying to cut down the amount of people with outstanding issues."
Mr Carter said: "We believe Green Acres is incredibly exposed, because on their website they describe the area manager as working for them, and the guy [Lapham] definitely had a card saying he was area manager."
The Green Acres website described a Green Acres area manager as someone who "works with the franchise support office" as part of his or her responsibilities.
Auckland Chinese lawyer Raymond Huo said he had been approached by Mr Carter to help the victims, and will be meeting representatives of the group to discuss their legal options today.
Green Acres declined to comment when contacted by the Herald yesterday.
Franchise Watch spokesperson Ketan Trevidi said the meeting with Mr Carter was meaningful and reassuring.
"I think the minister was genuinely concerned at how much people are suffering because of this, and he reassured us that he will do everything in his power to help us," he said.
National MP Pansy Wong also met several victims on Friday.
She felt the best way forward was for the police, the Commerce Commission and the Serious Fraud Office to pool their resources for the investigations and come up with with a conclusion swiftly.