Is the Cilantro Taco Grill Multi-Unit Operator Agreement a required contract for all franchisees?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
her than a dedicated Cilantro Taco Grill outlet such as distribution through retail outlets, including but not limited to, grocery stores; ghost kitchens; co-branding within other food outlets; in captive market locations, such as airports and malls; and the Internet.
- 2.3 No License to System and Marks. Multi-Unit Operator expressly acknowledges that this Agreement is not a Franchise Agreement and does not grant to Multi-Unit Operator any right or license to operate a Cilantro Taco Grill outlet, distribute any product or service, or use the Marks. This Agreement sets forth conditions which, if fully satisfied, confer upon Multi-Unit Operator the rights to enter a Franchise Agreement with Franchisor to establish one or more Cilantro Taco Grill outlets in the Development Area only. Multi-Unit Operator's rights to open and operate a Cilantro Taco Grill outlet and use the System and Marks shall be derived only through the execution of a Franchise Agreement for each Cilantro Taco Grill outlet to be established in the Development Area.
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- TERM. Unless sooner terminated in accordance with this Agreement, the term of this Agreement and all rights granted by Franchisor under this Agreement shall expire on the date on which Multi-Unit Operator successfully and in a timely manner has complied with all of Multi-Unit Operator's obligations hereunder and has completed the development obligations in accordance with the Mandatory Development Schedule.
4. DEVELOPMENT AND FRANCHISE FEES.
4.1 Multi-Unit Operator Fee. In consideration of the rights granted under this Agreement, Multi-Unit Operator shall pay Franchisor a development fee (the "Development Fee") as outlined in Attachment 3 hereto.
Source: Item 22 — CONTRACTS (FDD pages 51–52)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, the Multi-Unit Operator Agreement is not a standard agreement for all franchisees. Instead, it is specifically designed for those who plan to open multiple Cilantro Taco Grill locations within a designated development area. The document states that this agreement sets forth conditions that, if met, allow the operator to enter into a Franchise Agreement with Cilantro Taco Grill to establish multiple outlets in a defined area.
The Multi-Unit Operator Agreement does not grant the operator the right to operate a Cilantro Taco Grill outlet or use the brand's system and marks. These rights are only conferred through the execution of a separate Franchise Agreement for each individual Cilantro Taco Grill location. This means that while a Multi-Unit Operator Agreement allows for the opportunity to develop multiple locations, each location still requires its own franchise agreement.
The FDD specifies that upon acceptance of each subsequent Cilantro Taco Grill outlet to be developed under the Mandatory Development Schedule, the Multi-Unit Operator must execute an additional Franchise Agreement. This agreement will include the accepted street address for the new location. The Multi-Unit Operator is also required to own a minimum of 51% of the issued and outstanding stock for each restaurant opened under these Franchise Agreements, ensuring they maintain control over each operating entity.