EXHIBIT 101 / THE HANDBOOK
EXHIBIT#30HIGH
Management & OwnershipComposite score: 70/100

Franchise Fee Underreporting

A franchisee suppresses reported sales — sometimes with illicit software — to shrink the royalty owed to the franchisor.

Risk Scores

Frequency50
Financial Loss90
Detection Difficulty80
Prevention Ease70
Composite Score70/100

Perpetrator Roles

Manager

Affected Formats

QSRFast Casual

Detection Difficulty

Extremely difficult to detect without automated monitoring. Manual audits rarely catch this scheme.

HOW IT WORKS
Employee files injury claim
Injury exaggerated or fabricated
Claim processed and paid
Employee continues working elsewhere
Insurer pays inflated claim
Handbook Chapter · F-030

Workers Compensation Fraud

Full chapter with identity card, real examples, warning signs, detection and prevention guidance.

Exhibit AI Detection

AI-Powered Detection Design

Compare franchisee-reported sales against independently sourced data — delivery-platform revenue, payment-processor settlement data — that the franchisee doesn't control.

Prevention Guidance

Audit Controls

Standard audit procedures are effective. Regular cash counts and reconciliation catch this scheme early.

Technology

Automated POS monitoring, real-time exception reporting, and AI-driven anomaly detection significantly reduce exposure.

Culture & Training

Staff awareness programs, anonymous reporting channels, and clear consequence policies deter opportunistic fraud.

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