What is the anticipated arrangement for the Cilantro Taco Grill Franchised Business's premises?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
3 Premises Deposits. We anticipate that you will rent the Franchised Business's premises. It is possible, however, that you might choose to buy, rather than rent, real estate on which a building suitable for the Franchised Business already is constructed or could be constructed. An outlet would require a minimum of approximately 800 to 2,000 square feet. Real estate costs depend on location, size, visibility, economic conditions, accessibility, competitive market conditions, and the type of ownership interest you are buying. Because of the numerous variables that affect the value of a particular piece of real estate, this estimated initial investment table does not reflect the potential cost of purchasing real estate.
4Rent – 3 Months. Landlords may vary the base rental rate and charge rent based on a percentage of gross sales. In addition to base rent, the lease may require you to pay common area maintenance charges ("CAM Charges"), your pro rata share of the real estate taxes and insurance, and your pro rata share of other charges. The actual amount you pay under the lease will vary depending on the size of the Franchised Business, the types of charges that are allocated to tenants under the lease, your ability to negotiate with landlords and the prevailing rental rates in the geographic region. We relied upon the experience of our affiliates to compile this estimate.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–21)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, the franchise anticipates that franchisees will rent their business premises. However, the FDD notes the possibility of purchasing real estate instead. The document specifies that an outlet would need to be a minimum of approximately 800 to 2,000 square feet. The FDD indicates that real estate costs are highly variable, depending on factors such as location, size, visibility, economic conditions, accessibility, and competitive market conditions.
The estimated initial investment table does not include the potential cost of purchasing real estate due to these numerous variables. The FDD lists 'Premises deposits' as a line item with an estimated cost of $5,000 to $10,000, payable to the landlord or utility providers as required. Additionally, the 'Rent – 3 months' is estimated to be $15,000 to $30,000, paid to the landlord as required.
Furthermore, franchisees should anticipate costs for 'Ancillary Real Estate Costs' ranging from $5,000 to $25,000, which are incurred before opening and paid to providers and/or the landlord. The FDD also mentions that landlords may charge rent based on a percentage of gross sales, along with common area maintenance charges, real estate taxes, insurance, and other charges. The actual amount paid under the lease will depend on the size of the franchised business, the types of charges allocated to tenants, the franchisee's ability to negotiate, and the prevailing rental rates in the area.