Getting in trouble with the law for alcohol violations can easily shut down your restaurant. And when customers find out you’ve been cheating them out of what they paid for, you’ll suffer more than penalties. Two women in New Jersey have sued the Briad Restaurant Group, a franchise firm that holds 13 TGI Friday’s locations, for selling them cheap alcohol instead of premium in drinks they had ordered.
As a franchisee, you might think cutting corners is okay. But in this particular case, it’s highly illegal. Investigators found some bottles at the franchise locations were full of rubbing alcohol mixed with coloring to look like scotch. This cost-cutting measure could have put the lives of their customers in danger. The culprits will probably be facing charges for more serious crimes than just pulling the wool over a customer’s eyes. This type of practice to save money is not only bad business — it’ll potentially land you in jail.
If you’re worried about not making a profit with your franchise, you probably wouldn’t consider resorting to methods like those allegedly used by Briad’s staff. There may be other things you’d consider, though. Would you substitute a cheaper brand of raw ingredients or supplies, make a serving size a bit smaller, have fewer staff on hand than recommended, or cut hours to save on staffing and utilities?
Cutting corners in legal ways may seem like a good idea if your franchise is having trouble, but you need to think about the repercussions not only for your relationships with customers but also for your relationship with your franchisor. Often, cutting corners is not allowed by franchisors and will break your contract with them and bring in all kinds of unwanted results.
Even if your contract doesn’t specify every item you might see as a potential cost-cutting trick, you could lose business to a competitor if customers begin to feel that your quality isn’t up to snuff.
When you’re a new franchisee, you might not know what really matters to the business process and what doesn’t. It’s wise to resist the urge to make “cost savings” decisions without discussing it with your franchisor or franchise business mentor. Chances are, the franchisees in the news story mentioned above knew they were doing wrong, but sometimes cutting corners looks like a good idea, and it’s only when you get more information that you see the dangers.
Part of making sure you don’t cut corners unwisely is to make sure you have enough capital in place to take care of your business until it becomes profitable. When you’re struggling and it feels like everything will go under, it’s hard to resist the temptation to cut corners. Ensuring you have enough money to get by, however, allows you to execute the business plan as it should be and have all the necessary parts that you might not know why the matter at the start.