Taco Bell Franchise Costs, Fees & FDD

Year Business Began: 1962

Franchising Since: 1964

Headquarters: Irvine, California

Estimated Number of Units: 8,755

Franchise Description: Taco Bell Franchisor, LLC is the franchisor. Its predecessor and intermediate corporate parent is Taco Bell Corp. Taco Bell's ultimate corporate parent is YUM! Brands, Inc. The franchisor grants non-exclusive rights to franchisees to operate, by utilizing the Taco Bell name, trademarks, tradenames, trade secrets, logotypes, commercial symbols, service marks, and other intellectual property, a variety of quick-service consumer feeding facilities presenting various items of inexpensively priced, quality Mexican-style food for take-out and on-premises eating by the general public.

The different types of facilities for which the franchisor grants franchises include:

• 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.
• In-Lines: 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.

Training Overview: The franchisor requires that the franchisee and one manager successfully complete its training program to its satisfaction. The management training program, offered on an as-needed basis, is a minimum of seven weeks. Depending on the size and the geographical location of the franchisee’s organization, the training may be extended to eight weeks. If the unit is multi-brand, additional time for the other brand’s training is required. The training consists of web-based or e-learning training, as well as on-the-job and classroom training. The franchisor furnishes franchisees, as it deems appropriate, with advice and assistance in managing and operating the unit, including local visits by its representatives.

Territory Granted: The Franchise Agreement does not provide territorial protection or exclusivity for franchisees, although the franchisor may grant such rights in separate transactions or by policy on a temporary basis. The franchisee’s rights under the Franchise Agreement are non-exclusive and do not include the right to prevent any other uses by any persons or entities of the trademarks or the system regardless of how close they are or will be to the unit.

Obligations and Restrictions: Franchisees must devote their full time, best efforts and constant personal attention to the day to day operations of the unit. If the franchisor has authorized franchisees to name an employee as the supervisor of the unit, then that person must successfully complete the training program and is required to devote their full time, best efforts and constant personal attention to the day-to-day operations. Except as otherwise provided in the Franchise Agreement, franchisees or a qualified restaurant manager must maintain their personal residence within a driving time of approximately one hour from the unit. During the term of the Franchise Agreement, franchisees and their immediate family, employees, shareholders, and others associated with the franchisee or the franchise, must not engage in the service of Mexican-style menu or food items at the unit or anywhere else, except for Taco Bell's own brand of Mexican-style menu or items. Franchisees must offer for sale and sell all and only the food, beverages, and other products described in the manual.

Term of Agreement and Renewal: The initial term of the Franchise Agreement is 25 years for a new traditional unit, 20 years for a new power pumper unit, and 10 years for a new in-line or end-cap unit. A Successor Franchise Agreement is available with a 20-year term for a successor to a traditional unit; 10-year term for a successor in-line or end-cap unit.

Financial Assistance: The franchisor may attempt periodically to identify lenders willing to extend financing to franchisees. The assistance in identifying lenders is not an approval or endorsement by the franchisor of any of the lenders or of the financing arrangements. The terms of any such financing arrangements will be agreed upon between the franchisee and the lender and may vary widely. Yum has entered into an arrangement with a third-party, LS BDC Adviser, LLC, an affiliate of Lafayette Square Holding Company, LLC (lender), pursuant to which the lender (through one or more of its managed or advised funds) may provide financing to qualified franchisee applicants, including low-to-moderate income individuals in underserved American communities. In addition to Yum’s arrangement with LS BDC Adviser, Yum may, but is not obligated to, provide similar lending assistance to qualified franchisee applicants who receive financing from other lenders.

Estimated Initial Investment

Name of Fee	Low	High
Background Check Fee (per person)	$500	$700
Initial Franchise Fee	$25,000	$45,000
First Unit Construction Services	$27,250	$27,250
Optional Real Estate Services	$10,000	$37,250
Permits, Licenses, Security Deposits	$75,000	$150,000
Real Property	$45,000	$1,400,000
Building/Site Construction	$450,000	$2,000,000
Equipment/Signage/Decor/ POS	$250,000	$575,000
Initial Inventory	$7,000	$10,000
Grand Opening Expense	$5,000	$5,000
Additional Funds - 3 months	$40,000	$60,000
ESTIMATED TOTAL*	$934,750	$4,310,200

*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.

Purchase of Existing Restaurants from the Franchisor or an Affiliate

Name of Fee	Low	High
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

Other Fees

Type of Fee	Amount
Grand Opening Expense	$5,000 to be spent by franchisees for advertising and promoting the opening of the unit.
Period Franchise Fee	5.5% of the unit's gross sales.
Period Marketing Fee	4.25% of the unit's gross sales.
Late Charges	The lesser of 18% per annum or the highest rate permitted by New York law, plus the then-customary administrative charge.
Digital Transaction Fee for Mobile, Web, Kiosk, Connect Me Drive Thru & Delivery Orders	$0.19 per digital transaction.
Gift Card Transaction Fee	$0.19 per gift card transaction.
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 apply 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.
Relationship Agreement and MBOA Legal Fees	The franchisor estimates the legal fees for its negotiation of a relationship agreement to be between $20,000 and $100,000, but may be higher.
Reimbursement of Insurance Expense	Actual cost of insurance.
Successor Fees	Varies by unit type
Extension Fee	$250 per month for 1-3 -months, $500 per month for 4-6 months, plus $1,000 for each additional month for 7+ 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% 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.
System-One Merchandising Program for Taco Bell Units or Multi-One Merchandising Program for KT Units	$715 per quarter per restaurant.

The above information has been compiled from the FDD of Taco Bell. Year of FDD: 2025.
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