Franchise Investigation #2

The problem

The franchisor of a national chain of food outlets was concerned either the franchisee at one particular store was taking money from the till or, unknown to management, one or more staff members were doing so.  

Franchise fees were payable on turnover, so any decrease in the stores profits impacted on the franchisor.  

The franchisor also considered it was possible store revenue was simply down for other unknown reasons.  We were asked to investigate.

The solution

Manned surveillance to record all till activity was attempted, but this was deemed unviable on a long term basis.  It did, however, confirm there was no downturn in general trade.  Customers were counted over extended periods and this showed no anomalies with older trading records.  

The franchisor owned the business premises and, on our advice, requested after-hours access to the premises so a “smoke detector” could be installed.  This was done, but the smoke detector also had an extra component, a hidden camera, which transmitted a video feed to a digital recording device which was secured in near-by premises.  

The camera was positioned directly over the till and was able to record what went into and out of the cash drawer.  This was subsequently matched to the daily till records, which the franchisee was obliged to provide to the franchisor.

The outcome

We found the franchisee (the store owner) attended the store very infrequently and when they did, it was only for short periods.  It seemed they relied very heavily on their staff.

All cash transactions at the till was reviewed and matched with the till records.  Of the five full and part-time staff employed, four were confirmed to be short changing the till.  The till was frequently left partially open after transactions and on numerous occasions, customer change was provided, but the sale was not recorded on the till.  

The franchisee was advised of our investigation.  Four staff members were dismissed and replaced.  The franchisee was required to spend more time at the store to supervise staff.