Things just keep going from bad to worse for TGI Fridays.
The beleaguered restaurant chain, which recently filed for bankruptcy, now has a new problem to deal with: gift cards.
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Fun fact: TGI Fridays gift cards never expire, and there are currently around $50 million worth of them gathering dust in drawers and wallets across the world.
If TGI is filing bankruptcy and potentially disappearing anyway, that’s not really an issue, right? Bear with me for a second: the company’s bankruptcy filing only includes the 39 corporate-owned TGI Fridays locations in the US. It doesn’t cover the 121 franchised locations around the US, or the 316 international franchised locations.
When customers use gift cards at one of TGI’s franchise locations, the franchise gets reimbursed from the parent company. But now the parent company is in a sticky financial situation, a lot of franchise owners are worried they’re going to have to honor gift cards without a guarantee of reimbursement.
You’ve got to love it when popular slang makes it into court hearings, like when an attorney representing 60 franchisees was worried that his client would be “left holding the bag”. TGI Fridays told the court that it intends to fully honor its obligations, including gift card redemptions. A bankruptcy judge let the company continue its gift card program, albeit temporarily, to give franchisees more time to figure out how to navigate this financial minefield.
The company is $37 million in debt and plans to start selling assets in early January. If you’ve got a gift card lying around, it probably wouldn’t be a bad idea to use it sooner rather than later, because there’s no telling if franchisees will actually get that money back once all of the bankruptcy proceedings have wrapped up. That is, if you care about that $25 TGI Fridays voucher you won in an office contest back in 2011, or even remember where it is.
