Do you want to start a restaurant business by buying Taco Bell franchise? If YES, here is how much it cost to open a Taco Bell franchise and the requirement.
How Much It Cost to Open a Taco Bell Franchise
- Financial Requirements
Estimated Initial Investment
- Application & Background Check Fee (per person): $350 – $600
- Initial Franchise Fee: $25,000 – $45,000
- First Unit Construction Services: $27,175 – $27,175
- Optional Real Estate Services: $0 – $37,175
- Permits, Licenses, Security Deposits: $74,000 – $74,000
- Real Property: $20,000 – $1,400,000
- Building / Site Construction: $177,000 – $900,000
- Equipment / Signage / Décor / POS: $150,000 – $320,000
- Initial Inventory: $7,000 – $10,000
- Grand Opening Expense: $5,000 – $5,000
- Additional Funds – 3 months: $40,000 – $60,000
- ESTIMATED TOTAL: $525,525 – $2,851,775
Please Note That: The estimated initial investment range covers multiple variations of new “Traditional” restaurant types. Please see FDD for more details. There is a separate FDD for “Express” restaurant types as well. If you are interested in purchasing an existing Restaurants from the Franchisor or an Affiliate, then the you should be guided by the following;
- Initial Franchise Fee: $25,000 – $45,000
- Building, Equipment, Signs and Inventory: $150,000 – $1,755,000 or more
- Any Leasehold or Other Real Property: interests Varies
- TOTAL PURCHASE PRICE: $175,000 – $1,800,000 or more
Aside from the fees listed above, below are other fees you would need to pay if you are interested in buying this franchise;
- Grand Opening Expense: $5,000 to be spent by franchisees for advertising and promoting the opening of the Unit.
- Period Franchise Fee: 5.5 percent of the Unit’s Gross Sales.
- Period Marketing Fee: 4.25 percent of the Unit’s Gross Sales.
- Late Charges: The lesser of 18 percent per annum or the highest rate permitted by New York law, plus the then-customary administrative charge.
- Back of House (BOH) & Support Services: $2,078 per year
- Front of House (FOH) & Support Services: $1,480 per year
- All Access Fee: $1,500 per year
- Additional Trainee Fee: $350 per person
- Training Materials: As established by the franchisor.
- Cost of Audit of the Franchisee’s Books: Any and all costs incurred in connection with the inspection or audit, including reasonable accounting and legal fees.
- Transfer Fee: A transfer of all or a portion of the franchisee’s interest in any Unit is subject to a transfer fee. Minimum fees are listed below and are subject to increase for costs incurred by the franchisor, including but not limited to outside counsel fees, in connection with reviewing and effecting the transfer.
- – 3rd party transfers: 1-5 units: $7,500/unit, 6 or more units: $1,500/unit- 3rd party transfers involving private equity: Greater of non-private equity transfer fee or $150,000
- – Entity restructures: $2,500 total unless changes to the franchise agreements are required, in which case the transfer fee shall be the third party transfer fee.
Additionally, unique or complex restructures may necessitate a higher fee.
Reimbursement of Insurance Expense: Actual cost of insurance.
- Mid-Term Upgrade: $122,000 unless franchisees enter into an In-Line Franchise Agreement with a 10 + 10 Addendum in which case the cost is $25,750.
- Successor Fees: For Traditional Units and Power Pumpers, the greater of $22,500 or ½ of the current initial franchise fee for the applicable type of Unit. For In-Lines and End-Caps, the greater of $12,500 or ½ of applicable then current initial franchise fee. Additionally, franchisees will be required at their expense to complete an offset, scrape/rebuild, or major remodel of the Unit as a condition to obtaining successor agreement.
- Extension Fee: $750 for a 3 month extension; $2,250 for a 6 -month extension plus $1,000 for each additional month beyond 6 months.
- De-Identification Costs: Actual cost of de-identifying Unit.
- Attorneys’ Fees: Prevailing party in any litigation is entitled to reasonable attorneys’ fees and costs paid by the other party. Outside counsel fees may also be due in connection with review and approval of a transfer of interest.
- Liquidated Damages: If the Franchise Agreement is terminated for certain specified reasons, franchisees must pay liquidated damages equal to the greater of 11 percent of Unit’s gross sales for last 12 months of operation or $100,000.
- Development Fee (Development Agreement): If franchisees purchase existing Units from the franchisor and enter into a Development Agreement, and fail to timely open required Units, they must pay Taco Bell $45,000 and periodic payments of $4,231 until the actual opening date of each new Unit or 10 years from the missed opening date, whichever first occurs.
Steps on How to Get Taco Bell Franchise
If you are cool with the requirements and finance involved in acquiring this franchise, then you need to follow these steps;
- Fill the application at the website for opening a store. You will need to include your name, address, city and state. You will need a phone number and email address. Then choose the amount of capital you want to invest.
- Wait for the email that confirms that your application was received and is being reviewed. This email will tell you if you will be approved for the location. It will also go into more specifics regarding the financing. You will be asked to schedule a time for an associate to call you and talk more.
- Ensure to have your financial papers ready when you have your phone conversation. This is very important especially at that point. This is when you will find out if you have enough money to open the store or if you will need financing. If you need help with financing, you can apply for an SBA prequalified loan through the website even before the call.
- Note that approval is expected to be quick once you meet the requirements. You should already have a building with all the hookups. After you are approved, the organization will start sending fixtures and merchandise to your building.
- You will then be mandated to attend a workshop at the headquarters before the opening of your store.
YUM! Brands, Inc. offers an optional lending assistance program for qualified minorities. If franchisees meet YUM’s criteria for the YUM Minority Lending Assistance Program and YUM! Brands, Inc., in its sole discretion, agrees to allow them to participate, then YUM’s lending assistance will take the form of YUM! Brands, Inc. guaranteeing 25 percent of the principal of their franchised business loan, up to a maximum of $3,000,000 per loan or franchisee.
YUM! Brands, Inc. can discontinue the YUM Minority Lending Assistance Program at any time. Except as described, the franchisor does not offer, directly or indirectly, any arrangements for financing a franchisee’s initial investment or the continuing operation of the Taco Bell business.
What You Must Know About Taco Bell’s Franchise
Taco Bell Franchisor, LLC is the business arm that is responsible for managing the franchise. Its predecessor and intermediate corporate parent is Taco Bell Corp. Taco Bell’s is being managed by YUM! Brands, Inc. which happens to be the parent company in charge of the Taco Bell brand.
If you invest in this franchise as a franchisee, you will be granted non-exclusive rights to operate, and you can leverage on this by utilizing the Taco Bell name, trademarks, tradenames, trade secrets, logotypes, commercial symbols, service marks, and other intellectual property; and a variety of quick-service consumer feeding facilities representing various items of inexpensively priced, quality Mexican-style food for take-out and on-premises eating.
Please note that there are different types of facilities for which the franchisor grants franchises and they are;
- Traditional Units
Free-standing, permanent buildings of various sizes and configurations that offer the full Taco Bell menu. The buildings include a kitchen facility where food is prepared and assembled, a counter where orders are placed and paid for and food is delivered, tables and seats for customers and, frequently, an automobile drive thru.
Locations with or without a drive thru that also include the other above features. In-Line units with a drive thru are referred to as “End-Caps.”
- Power Pumpers
Buildings with several of the above features that share a facility with a gas and convenience store.
- Taco Bell Express (Custom Facades)
Less elaborate facilities offering a limited selection of the items found in the full Taco Bell menu. The Custom Facades include stand-alone units constructed on sites within larger buildings and permanently constructed installations of various configurations taking advantage of available space in various types of locations.
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