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McDonald’s Franchisees: Be Aware to Combat Employee Fraud

Posted by Angel Chiariello on Tue, Nov 5, 2019

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McDonald’s Franchisees: Be Aware to Combat Employee FraudHardworking employees are to be treasured and valued for the contributions they make to your restaurants, but unfortunately as any experienced restaurant owner knows, not every employee is earnest.

Employee fraud is regrettably commonplace in many businesses. Near our office in St. Petersburg, Fla., there was a recent case involving a Dunkin’ doughnut shop manager who created a fake or “ghost” employee and collected and cashed their paychecks.

Ghost employees are a real problem for many businesses with a lot of employee turnover, like McDonald’s and other quick-service restaurants. It’s among the most common types of payroll fraud, according to the Association of Certified Fraud Examiners.

There are some fairly easy steps McDonald’s Owner/Operators can take to combat ghost employee fraud. Here are some ways our franchisee clients tackle this problem:

  • Require in-person orientation meetings for all new employees in the central office. This reduces the managers’ ability to create fake employees because every employee is required to meet with central office staff.
  • Allow individual managers to conduct hiring, but require every new employee to provide a copy of their driver’s license and social security number to a central human resources manager.

The bottom line is, your hiring process should involve more than one person. The same is true for any important process; checks and balances are key to stopping fraud.

McDonald’s franchisees should also be aware of another employee theft technique involving credit card refunds. Recently, an owner/operator became aware of some employees restoring fake refunds to their own credit cards.

The fraud was discovered because of an extraordinarily high amount of credit card refunds in the franchisee’s monthly financial records. This is why it’s imperative to review your financial records thoroughly and in a timely manner for anything out of the ordinary.

Another safeguard used is a closely-protected POS password for refunds or any other overrides. Protect the POS password; it must not be shared for any reason. Change the password frequently; these changes should occur daily or at the very least, every few days, to ensure security.

Read more about recommended internal control practices for McDonald’s Owner/Operators in this article.

Combatting fraud will not only save you headaches and bad publicity, but will also help you drive more of your hard-earned dollars to the bottom line.

Topics: McDonald's management

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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