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Taco John’s Franchise Costs $770K – $2M (+ 2024 Profits)

Taco John’s, a prominent name in the fast food industry, boasts a vibrant history and a distinctive approach to Mexican cuisine. Founded in 1969 in Cheyenne, Wyoming, the brand was born from a simple taco stand that quickly gained popularity due to its unique flavors and dishes.

Two local businessmen recognized the potential of the stand and acquired the franchise rights, officially launching Taco John’s, named in honor of the original founder, John. Headquartered in Cheyenne, Wyoming, Taco John’s it one of the largest Mexican quick-service restaurant brands in the U.S.

The franchise started expanding its reach in 1969, just a year after its inception, and has developed a reputation for its signature items like Potato Olés®, Meat and Potato Burritos, and the cultural phenomenon of “Taco Tuesday,” which it initiated​​. What sets Taco John’s apart in the competitive fast-food sector is its commitment to quality and bold flavors, with a focus on real ingredients and freshly-prepared meals.

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Initial investment

Type of ExpenditureAmount
Initial Franchise Fee$20,000 to $25,000
Site Preparation and Completion Costs$250,000 to $500,000
Construction Costs$650,000 to $900,000
Operating Equipment$185,000 to $250,000
Furniture, Fixtures and Decor$35,000 to $55,000
Signage and Installation$30,000 to $70,000
Point of Sale System$20,000 to $35,000
Digital Menu Boards$35,000 to $65,000
Initial Inventory$15,000 to $22,000
Grand Opening Marketing$10,000 to $12,000
Pre-Opening Training (Travel and Living Expenses)$35,000 to $45,000
Miscellaneous Opening Costs$20,000 to $60,000
Additional Funds$25,000 to $40,000
Total Estimated Initial Investment*$1,330,000 to $2,079,000
* for a freestanding traditional Taco John’s Restaurant

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Franchise fees & Royalties

Initial Franchise Fee

The Initial Franchise Fee for a traditional Taco John’s Restaurant is generally between $25,000 and $30,000, depending on specific franchise agreements and conditions. For non-traditional Taco John’s Restaurants, the fee is $10,000.

Royalty

Royalty is payable as a percentage of Net Sales, currently set at 5% for both traditional and non-traditional restaurants.

Marketing/Advertising Fee

You agree to pay a Marketing and Advertising Fee of 4% of the Net Sales of the Restaurant, deposited into an Advertising Fund. This fee is used for marketing purposes and is payable in the same manner as the Royalty.

Technology Fee

The Technology Fee is payable in the same manner as the Royalty, and is used for development and support of technology. Specific details on the fee amount are not established yet, but it will cover various technology-related services.

Lease or Rent Fee

Details on lease or rent fees are not directly provided in the document. Generally, these would be detailed in individual lease agreements and vary by location.

Transfer Fee

The Transfer of Ownership Fee is 15% of the then-current Initial Franchise Fee, payable upon approval of the transferee, regardless of whether a transfer occurs.

Renewal Fee

The Renewal Fee is 25% of the then-current Initial Franchise Fee, payable upon franchise renewal.

Management Fee

Management fees vary based on the services provided, with optional management services costing approximately $250 to $350 per month. These fees cover various support services as needed.

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Franchise pros and cons

The Pros:

  • Growth opportunities: Taco John’s has experienced steady growth over the past decades. And partnering with this franchisor provides exciting growth opportunities
  • Marketing support: the franchisor provides many resources to help franchisees optimize customer growth. The range of promotional tools includes SEO, ad templates, email marketing, regional advertising, and social media. 
  • Extensive training and support: the franchisor offers extensive hands-on training to help business owners grasp the best in-restaurant management practices including 148 hours of on-the-job training and 22 hours of classroom learning
  • Continual support: the franchisor also offers franchisees support to help with the day-to-day business operations. This includes lease negotiation, online support, security and safety procedures, proprietary software, site selection, and field operations
  • Third-party financing: Taco John’s partners with suitable third-party sources to help franchisees cover the startup costs, equipment, and inventory. 
  • Allows absentee ownership: the franchisor allows passive ownership. Thus, the franchisee doesn’t have to get involved in everyday operations. It favors restaurant owners who value flexibility. 
  • Exclusive territorial protection: as part of the franchise agreement, franchisees get exclusive rights to launch and run their restaurants in designated locations without worrying about competition from similar units. 

The Cons:

  • Preferences may not suit all franchisees: Taco John’s prefers franchisees with some background experience running multiple franchises or businesses. Novices may find it challenging to start and operate this franchise. 
  • Can’t run the franchise part-time: Taco John’s franchise isn’t a part-time investment. 
  • Minimum employees requirement: there’s a 30-45 minimum number of employees required to run the business. 
  • Competition: Currently, Taco John’s is facing competition from other quick service restaurants like Chipotle Mexican Grill, Baja Fresh Corp, and Golden Chick

How to open a taco john’s franchise

1: Meet Financial Requirements

  • Net Worth: Ensure you have a net worth of at least $1 million.
  • Liquid Capital: Have at least $500,000 in documented liquid assets.
  • These financial thresholds help ensure that potential franchisees have the necessary resources to start and sustain the business operations​​.

2: Express Interest

  • Contact Taco John’s: Fill out an initial inquiry form on Taco John’s franchise website indicating your interest.
  • Provide Personal and Financial Details: Submit information regarding your financial status, personal background, and potential locations for your franchise​​.

3: Application and Due Diligence

  • Application: Complete a formal application provided by Taco John’s.
  • Review Franchise Disclosure Document (FDD): Carefully review the FDD which details the obligations and responsibilities of the franchisee and franchisor.
  • Due Diligence: Engage in due diligence by communicating with existing franchisees and reviewing financial performances​​.

4: Discovery Day

  • Visit Headquarters: Attend a Discovery Day at Taco John’s headquarters in Cheyenne, WY. This visit allows potential franchisees to meet the corporate team and learn more about the operational aspects of the franchise.
  • Operational Review: Gain a deeper understanding of the day-to-day operations and marketing strategies​.

5: Sign Franchise Agreement

  • Agreement Details: Review and sign the Franchise Agreement that outlines all the legal and financial commitments.
  • Franchise Fee: Pay the initial franchise fee of $25,000 for the first location, and $20,000 for each additional location​​.

6: Site Selection and Approval

  • Location Scouting: Identify and propose potential sites for your Taco John’s franchise.
  • Corporate Approval: The proposed locations will be reviewed and must be approved by the Taco John’s corporate team.
  • Drive-Thru Requirement: Consider that a drive-thru window is necessary for most locations, although exceptions exist for non-traditional venues like airports or malls​​.

7: Training and Support

  • Comprehensive Training: Undergo a training program that covers food preparation, customer service, and business management.
  • Marketing and Operational Support: Receive ongoing support in marketing, advertising, and day-to-day operations to ensure compliance with Taco John’s standards​​.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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