When is the Development Fee due for a Cilantro Taco Grill Multi-Unit Operator Agreement?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
ning fee as above
We will charge you a development fee ("Development Fee") when you sign the Multi-Unit Operator Agreement. You must develop a minimum of 5 outlets to enter into a Multi-Unit Operator Agreement. The Development Fee is based on the total number of Franchised Businesses that you commit to develop under the Multi-Unit Operator Agreement and is calculated as follows: $35,000 for the right to develop each of the first 3 outlets plus $17,500 for the right to develop the 4th and each additional outlet within your Development Area if you commit to develop between 5 and 9 outlets; or $35,000 for the right to develop each of the first 5 outlets plus $17,500 for the right to develop the 6th and each additional outlet within your Development Area if you commit to develop 10 or more units.
The Development Fee is fully earned by us and due in lump sum when you sign the Multi-Unit Operator Agreement. The Development Fee is not refundable under any circumstance.
Source: Item 5 — INITIAL FEES (FDD pages 11–12)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, the Development Fee for a Multi-Unit Operator Agreement is due in a lump sum when you sign the Multi-Unit Operator Agreement. This fee is fully earned by Cilantro Taco Grill at that time and is non-refundable under any circumstances. To qualify for a Multi-Unit Operator Agreement, you must commit to developing a minimum of 5 outlets.
The Development Fee is calculated based on the number of franchises you commit to develop. For the first 3 outlets, the fee is $35,000 per outlet. If you commit to developing between 5 and 9 outlets, you will pay an additional $17,500 for the 4th and each subsequent outlet. If you commit to developing 10 or more units, you will pay $35,000 for each of the first 5 outlets, plus $17,500 for the 6th and each additional outlet.
For example, if you commit to developing 5 franchises, the Development Fee is calculated as ($35,000 x 3 = $105,000) + ($17,500 x 2 = $35,000) = $140,000. If you commit to develop 10 franchises, the Development Fee is calculated as ($35,000 x 5 = $175,000) + ($17,500 x 5 = $87,500) = $262,500. This fee structure incentivizes larger multi-unit commitments, which is a common practice in franchising to encourage faster expansion and regional market penetration.