The Fair Work Ombudsman said it was concerned about the lack of any meaningful response or commitment from Pizza Hut head office since late January, when it was put on notice about widespread non-compliance with Fair Work laws within its network.

"Based on the response so far, I am not confident Pizza Hut head office is taking our concerns about non-compliance within its network seriously," Fair Work Ombudsman Natalie James said.

The compliance audits in January identified the underpayment of Pizza Hut delivery drivers and similar problems had now emerged involving in-store staff.

"If this non-compliance is replicated across the Pizza Hut network to the same extent of the delivery drivers, it would represent a significant failure to provide lawful wages and entitlements to the Pizza Hut workforce," Ms James said.

"Given the seriousness and potential impact of non-compliance in the Pizza Hut franchise, I am disappointed that we have not seen any concrete action from Pizza Hut head office.

"My agency will continue to target non-compliance in the Pizza Hut network, however, our strong preference is to work with head office to prevent these instances from occurring in the first place."

The warning comes after a Fair Work Ombudsman investigation found the franchisee of a Pizza Hut outlet in Newcastle, NSW, allegedly underpaid 24 casual employees a total of $19,762 between November 2015 and May 2016.

The Ombudsman said most of the employees at the outlet in Hunter Street were aged between 16 and 20 and included international students from Pakistan and Kenya.

Their duties included customer service, making pizzas, deliveries, cleaning and assisting with opening and closing stores.

The employees were paid flat rates that allegedly undercut minimum rates under the Fast Food Industry Award and an agreement covering the outlet's staff. Four of the workers were underpaid more than $3000 and an international student from Kenya was underpaid $4791.

Record-keeping and pay slip laws were also allegedly breached.

The Ombudsman said the franchise manager was operating his first business since immigrating from India and was not fully aware of his obligations under Australia's workplace laws. He told inspectors that he had not received any training from the Pizza Hut head franchisor to inform him of his obligations under the Fair Work Act.

The Fair Work Ombudsman said the franchise owner had started rectifying the underpayments and had entered into an enforceable undertaking with the agency. He had agreed to back-pay all employees in full by January next year.

The Fair Work Ombudsman audited 34 Pizza Hut franchisees last year and identified widespread non-compliance with Fair Work laws affecting delivery drivers. Inspectors found 28 of 32 franchisees had not complied with Fair Work laws.

The investigation led to legal action against a Pizza Hut franchisee on the Gold Coast for allegedly engaging in sham contracting activity and underpaying an Indian delivery driver more than $6000.

Compliance notices, infringement notices and letters of caution were issued to non-compliant franchisees.

Ms James said it was crucial that franchise service networks were proactive in ensuring they have systems in place to promote and ensure compliance.

Pizza Hut chief executive Lisa Ransom said Pizza Pan Group, the master franchisee of Pizza Hut in Australia since September last year, took its responsibilities to ensure franchisees understood their obligations as employers seriously.

"Pizza Pan Group is committed to working actively with its franchisees, employees and the regulator to ensure all workplace processes and procedures are compliant and best practice," she said.

"Pizza Pan Group denies that it has so far failed to appropriately engage with the Fair Work Ombudsman in matters of this kind."

Ms Ransom said the issue detailed by Fair Work related to activity in 2015.

"We have met with Fair Work on several occasions and requested further information on any breaches or activity they may have identified in this 2015 audit, but are yet to receive anything of this nature from them," she said.

Ms Ransom said measures put in place since it took over the business included a 24-hour hotline for employees and access to a third-party payroll provider and retraining on workplace employer obligations.

She said now Pizza Hut was aware of the Newcastle case, it was working with this franchisee to rectify concerns raised in the audit.