Is there a separate agreement for multi-unit operators of Cilantro Taco Grill franchises?
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. The Development Fee is fully earned at the time this Multi-Unit Operator Agreement is signed and is not
refundable under any circumstances. Multi-Unit Operator shall pay the full amount of the Development Fee to Franchisor upon Multi-Unit Operator's execution of this Agreement.
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.
Source: Item 22 — CONTRACTS (FDD pages 51–52)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, multi-unit operators are required to sign a separate agreement. This agreement outlines the conditions that must be met before the multi-unit operator is granted the right to develop additional Cilantro Taco Grill outlets. These conditions include executing the current Franchise Disclosure Document, submitting required information and financial statements, and meeting the franchisor's financial criteria for multi-unit franchisees.
The Multi-Unit Operator Agreement does not grant the operator the right to operate a Cilantro Taco Grill outlet or use the brand's marks. These rights are only obtained through the execution of a Franchise Agreement for each specific Cilantro Taco Grill location. The multi-unit operator must also adhere to a Mandatory Development Schedule, which outlines the required number of restaurants to be opened by specific dates. Failure to meet this schedule can result in the loss of territorial rights or termination of the Multi-Unit Operator Agreement.
For each subsequent Cilantro Taco Grill outlet to be developed, the multi-unit operator must execute the franchisor's current form of Franchise Agreement, which may differ from the initial agreement. However, the initial franchise fee, royalty fee, and local advertising costs will remain the same as the first franchise agreement. Multi-unit operators do not receive initial training for each additional outlet, as the training from the initial Franchise Agreement is deemed sufficient. The multi-unit operator must return the executed Franchise Agreement to Cilantro Taco Grill within fifteen days of receipt.
The multi-unit operator must own a minimum of 51% of the stock for each restaurant and maintain control over each entity operating the restaurant. The agreement also includes non-competition covenants, preventing the operator from engaging in any business featuring Mexican cuisine within a certain radius of Cilantro Taco Grill locations during the term of the agreement and for a period of time after its expiration or termination.