The 32-year-old Welshman was signed by former Argyle manager Carl Fletcher in the summer and has gone on to score three times in 16 starts.
But Fletcher's replacement has told Griffiths that he is surplus to requirements and will be allowed to move on if he can find a new club.
Sheridan told the club's official website: "Rhys is at the age of 32, he's come from non-league and he's had an opportunity here under a previous manager. I look for different strikers.
"I was just honest with Rhys and I explained to him that I won't stand in the way of another club, or he can find football elsewhere, because I'm going to look at other things and I'm going to go the way I think will hopefully get us out of the position we're in.
"Hopefully it will give him the opportunity and enough time to look for football elsewhere.
"He took it well. Hopefully he'll understand and he'll get somewhere that will benefit him, and he'll get more football than he would here."