Under what circumstances is the initial franchise fee for a Cilantro Taco Grill franchise refundable?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
5: INITIAL FEES**
We will charge you an initial franchise fee ("Initial Franchise Fee") when you sign the Franchise Agreement. The Initial Franchise Fee is $35,000. This payment is fully earned by us and due in lump sum when you sign the Franchise Agreement. The Initial Franchise Fee is not refundable under any circumstance.
If we perform an on-site location evaluation of the prospective site for the Franchised Business, you must pay to us our per diem fee of $500 and reimburse our representative's expenses, including travel, lodging and meals.
You must spend $15,000 on a grand opening advertising campaign to promote the opening of the Franchised Business. We reserve the right to collect this money from you and conduct the grand opening advertising campaign on your behalf. If we collect this money from you for the grand opening advertising campaign, it is non-refundable.
If your Franchised Business does not open within 12 months after you have signed the Franchise Agreement, except for circumstances that are not in your control, you must pay to us a delayed opening fee of $100 per day for each day that the opening of your Franchised Business is delayed, up to a maximum of 90 additional days. If your Store is not open after this additional 90 day period, then we may terminate your Franchise Agreement or we may require you to continue paying the delayed opening fee until your Store has opened. This fee is not refundable. If you are a Multi-Unit Operator and your Franchised Business does not open by the opening date provided in the Multi-Unit Operator Agreement, then you will pay the same delayed op
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 initial franchise fee is not refundable under any circumstances. The standard initial franchise fee is $35,000, which is due in a lump sum when the Franchise Agreement is signed. This fee is considered fully earned by Cilantro Taco Grill upon receipt.
Similarly, the development fee for multi-unit operators is also non-refundable. This fee varies depending on the number of outlets the operator commits to develop. For example, if an operator commits 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 they commit to 10 franchises, it's ($35,000 x 5 = $175,000) + ($17,500 x 5 = $87,500) = $262,500. These development fees are also fully earned upon signing the Multi-Unit Operator Agreement.
Furthermore, if Cilantro Taco Grill collects funds for the grand opening advertising campaign, these funds are also non-refundable. Franchisees are required to spend $15,000 on a grand opening advertising campaign. Additionally, a delayed opening fee of $100 per day, up to a maximum of 90 additional days, is imposed if the franchised business does not open within 12 months after signing the Franchise Agreement, unless the delay is due to circumstances outside the franchisee's control. This delayed opening fee is also non-refundable.