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R Taco Franchise Costs & Fees

Date of Incorporation: 2010
Franchising Since: 2010
Headquarters: Minneapolis, Minnesota

Business Description: Rusty Taco, Inc. is the franchisor. Franchisees operate a uniquely designed restaurant that offers freshly prepared food made with quality, fresh ingredients inspired by the flavors of Mexico and Texas, along with an assortment of alcoholic and nonalcoholic beverages under the R Taco trade name, trademark, and business system in an atmosphere designed to be a neighborhood gathering place.

Franchise Offer: The franchisor gives the right to operate Restaurants according to the R Taco proprietary business format and system.

Financial Assistance: The franchisor does not offer direct or indirect financing, and it does not guarantee franchisees’ notes, leases, or other obligations.

Training and Assistance: Franchisees (or their managing owner) must attend and complete our initial training program on the general business aspects of operating an R Taco Restaurant. The initial training program consists of classes conducted at one of the franchisor’s affiliate-owned Restaurants or other designated locations. This training will cover basic aspects of establishing and operating an R Taco Restaurant, including all phases of restaurant opening and closing procedures, food preparation and presentation, pricing, customer service issues, employee training and relations, cleaning procedures, cash management, budgeting and bill paying, forms, purchasing, inventory control and disposition, comprehensive marketing, selling skills, job functions, and maintenance of quality standards. The initial training is anticipated to last approximately 28-35 days. With respect to the franchisee’s first Restaurant, the franchisor will provide 10 days of on-site opening assistance at no charge, but franchisees are responsible for payment of all of their employee wages and for the cost of food used during the assistance period. The franchisor may also offer additional mandatory, optional, refresher, advanced, or other training programs or seminars from time to time, addressing common problems experienced by franchisees or addressing new products, services, or techniques to be utilized by franchisees, and the franchisor may establish reasonable fees for attendance at such events.

Territory: Franchisees will operate the Restaurant from a location that they select and that the franchisor approves. Franchisees will not receive an exclusive territory. They may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls. If franchisees are in full compliance with the Franchise Agreement, during the Franchise Agreement’s term (with limited exceptions), neither the franchisor nor its affiliates will operate, or authorize any other party to operate, an R Taco Restaurant within the Protected Territory specified in the Franchise Agreement. Generally, the “Protected Territory” will be a geographic area which is a circle having the Restaurant’s front entrance as its center and a radius of one mile, however, the franchisor reserves the right to change the definition of the Protected Territory in densely populated urban areas, (New York City or Washington DC, for example), and the Protected Territory may be as small as an office or retail building.

Term of Agreement and Renewal: The initial term will begin on the Effective Date and will continue until the earlier of (a) 10 years from the Opening Date, or if applicable, upon the expiration of termination of the franchisee’s right to possess the Restaurant premises. If franchisees are in good standing, they can renew for one additional 10-year term.

Obligations and Restrictions: The Franchised Business must be supervised on-premises by an Operating Principal. If the franchisee is an individual or general partnership, the Operating Principal will be the individual franchisee or one of the general partners. If the franchisee is a business entity, the Operating Principal must hold at least a 10% equity interest in the business entity. The Operating Principal must successfully complete our initial training program and must devote full-time efforts to the management and operation of the Franchised Business. Franchisees must offer and sell all menu items that the franchisor requires, and only those menu items that the franchisor has approved, and in the method or manner the franchisor determines, including dine-in, carry-out, and catering. Franchisees must prepare, package, and serve all menu items according to the franchisor’s recipes, standards, and procedures for preparation, presentation, and service as communicated to franchisees from time to time via the Operations Manual or other written directives.

Estimated Number of Units: 15

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $15,000 $15,000
Site Selection Assistance $0 $1,000
First Month’s Rent and Security Deposit $3,525 $5,090
Deposits $6,000 $10,000
Leasehold Improvements $253,000 $376,000
Permits and Licenses $3,000 $6,950
Architect Fee $15,000 $25,000
Restaurant Design Consulting Services $500 $1,500
Furniture, Fixtures, Equipment, and Signage $113,000 $140,000
Initial & Opening Training Costs $0 $12,000
Opening Assistance Costs $3,000 $12,000
Computer Hardware and Software $12,000 $24,000
Initial Inventory/Supplies $7,400 $10,000
Professional Services $5,000 $15,000
Initial Advertising and Marketing Expenses $10,000 $15,000
Insurance $6,000 $30,000
Additional Funds (3 months) $20,000 $50,000
ESTIMATED TOTAL $482,425 $757,540
Other Fees
Type of Fee Amount
Royalty Fee 5% of Gross Sales.
Brand Development Fund Contribution Up to 4% of Gross Sales.
Local Advertising Requirement 2% of Gross Sales until such time as the Brand Development Fund is instituted; then the amount the franchisor requires, but no more than a total of 4% of Gross Sales between the Brand Development Fund and Local Advertising.
Grand Opening Marketing Fee At least $10,000
Advertising Cooperative 1%-3% of Gross Sales when instituted.
Unauthorized Advertising $1,000 per occurrence.
Business Directory Listing Cost.
Interest Lesser of 18% per year or highest commercial contract interest rate law allows.
Non-Sufficient Funds Fee $50 for each returned check or draft; may be increased each year by an amount not to exceed 10% of the then-current amount plus reimbursement of our costs incurred to collect.
Additional On-Site Visits $500 plus reimbursement of the franchisor’s transportation, lodging, and meals.
Additional Opening Assistance If requested by franchisees or required by the franchisor, then-current per diem, plus reimbursement of the franchisor’s travel-related expenses; the franchisor’s current per diem rate is $250 per person; reimburse of its costs if franchisees reschedule the opening of their Restaurant.
Additional Ongoing Training Cost of tuition as determined at the time plus expenses of the franchisee’s personnel who attend training.
On-Site Remedial Training; Training of Replacement Personnel Then-current per diem fee for remedial training or to train the franchisee’s replacement personnel, plus reimbursement of the franchisor’s travel-related expenses if applicable; our current per diem rate is $250
Transfer Fee $1,500 fee to transfer for convenience of ownership or non-controlling interest; for all other transfers $5,000, plus reimbursement of the franchisor’s attorneys’ fees and Restaurant inspection expenses.
Renewal Fee 50% of our then-current initial franchise fee.
Private or Public Offering Fee Reimbursement of the franchisor’s reasonable costs and expenses associated with the proposed offering.
Inspection and Testing Cost of inspection, if applicable, and cost of test.
Indemnification Varies according to loss.
Audit Fee Cost of audit.
Data Management Fee To be determined, but based on the franchisor’s cost to provide such services.
Insurance Fee Reimbursement of actual costs to maintain coverage.
Online Ordering Up to $200 per month.
Lease or Contract Submission $50 per day for each day submission is late.
Operating Days $250 per day, each day the franchisee’s Restaurant is closed without permission.
Customer Comment Reimbursement Will vary.
Equipment Replacement or Repair Fee Will vary.
Relocation The franchisor’s reasonable attorneys’ fees.
Sale of Unauthorized Products/Menu Items $1,000 per occurrence.
De-identification Fee Will vary.
Proof of Certificates of Insurance Non-Compliance $250 for each certificate not submitted as required.
Management Services Fee The then-current per diem, plus reimbursement of the franchisor’s travel-related expenses, plus reimbursement of any other out-of-pocket expenses needed for Restaurant operations. The current per diem rate is $250
Liquidated Damages Will vary.

The above information has been taken from the FDD of R Taco. Year of FDD: 2016

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