Taquerias Arandas Aghast at Cheating Franchisees

Submitted by Juan F on Sat, 2008/11/08 - 06:53.

There's an outbreak of fraudulent franchise owners dragging the Taquerias Arandas Franchises, Inc. name through the mud. Two of the franchise owners have entered a guilty plea of filing false federal tax returns. More of the Mexican restaurants look like they are soon to follow.

. . . the incidents of tax fraud, which involve franchises owned by two family members, are limited solely to the franchisees.

Six other franchisees reportedly face charges of tax fraud but Taquerias Arandas itself is not involved in the continuing investigation and has fully cooperated with investigators. (The Pasadena Citizen)

What's a franchisor to do when its franchisees are such crooks? After all, it certainly doesn't want the public to begin thinking that Taqueras Arandas is Spanish for "We're cheap because you pay cash. We don't give receipts and don't report income."

Judy Cameron, president, plans a top to bottom review of its franchises,  including revising franchise agreements, training franchisees on P&L statements and requiring them to submit weekly P&L statements to the head office.

No votes yet

Tags:

»

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Weekly P&L's?

Submitted by Mufflerman on Sat, 2008/11/08 - 16:11.

Requiring franchisees to submit weekly P&L's? Nothing like killing a fly with a hammer....

Arandas is a really good concept in the right hands

Submitted by RichardSolomon on Sun, 2008/11/09 - 18:16.

Arandas has been very successful. Like all "affinity" franchising concepts - primarily a Latino community favorite - eventually too much trust and not enough policing of compliance breeds opportunistic taking of advantage by unpoliced franchisees.

What is called for now is for Arandas to get its house properly policed with evaluation of its current contract options; revision of agreements as that becomes possible, starting with new franchisees right now; and the adoption of electronic POS system that facilitates policing.

Properly supervised, Arandas ought to be in really great shape within 12 months at the most, even using its current agreement format.

If Arandas doesn't do that - sad as that really is to have to change the tone of their franchise relationship - their franchisees will eat them alive. By the time this went public, many good franchisees were suffering from morale deterioration, knowing that others were getting away with fudging. It always works this way. These are never kept secret from the troops.

--

Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

    Syndicate content