What is the initial franchise fee amount for each additional Cilantro Taco Grill outlet?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
4.2 Application of Development Fee. The Development Fee is calculated based on the number of units Multi-Unit Operator has committed to open. If Multi-Unit Operator commits to develop between five (5) and nine (9) Restaurants, Multi-Unit Operator shall pay a Development Fee of one hundred percent (100%) of the initial franchise fee for three (3) Restaurants, plus fifty percent (50%) of the initial franchise fee for each additional Restaurant. If Multi-Unit Operator commits to develop ten (10) or more Restaurants, Multi-Unit Operator shall pay a Development Fee of one hundred percent (100%) of the initial franchise fee for five (5) Restaurants, plus fifty percent (50%) of the initial franchise fee for each additional Restaurant. Contemporaneous with the execution of this Agreement, Multi-Unit Operator shall execute the initial Franchise Agreement for the first Cilantro Taco Grill outlet to be established pursuant to the Mandatory Development Schedule. Multi-Unit Operator shall receive a corresponding credit from the Development Fee, which shall be applicable to the Initial Franchise Fee due under the initial Franchise Agreement. Upon the execution of each of additional Franchise Agreement for outlets to be developed hereunder, Multi-Unit Operator shall receive a corresponding credit from the Development Fee, which shall be applicable to the Initial Franchise Fee payable pursuant to each such additional Franchise Agreement. Upon Franchisor's approval, Multi-Unit Operator may enter into the initial Franchise Agreement or any subsequent Franchise Agreement as required under this Agreement using a newly formed entity, such as a limited liability company, corporation or partnership, for the sole purpose of entering into a Franchise Agreement and operating the Cilantro Taco Grill restaurant outlet pursuant thereto, provided that Multi-Unit Operator shall also personally sign such Franchise Agreement as a principal.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, the initial franchise fee for each additional outlet is dependent on the agreement between the multi-unit operator and Cilantro Taco Grill. If the multi-unit operator commits to developing between five and nine restaurants, they will pay 100% of the initial franchise fee for three restaurants, plus 50% of the initial franchise fee for each additional restaurant. If the multi-unit operator commits to developing ten or more restaurants, they will pay 100% of the initial franchise fee for five restaurants, plus 50% of the initial franchise fee for each additional restaurant.
This means that for a multi-unit operator, the initial investment for additional Cilantro Taco Grill locations is reduced after meeting a certain number of committed units. This incentivizes multi-unit operators to expand their operations with Cilantro Taco Grill. The development fee is earned upon signing the multi-unit operator agreement and is non-refundable.
It's important to note that the initial franchise fee percentage is applied to the then-current initial franchise fee. This implies that the initial franchise fee could change over time, potentially affecting the actual dollar amount due for each additional franchise. Also, multi-unit operators do not receive any initial training related to each additional Cilantro Taco Grill outlet.