Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Taco Bell Franchise Costs (2017 FDD)

by Franchise Chatter on January 9, 2016

in Franchise Costs, Mexican Restaurant Franchise

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Don't Invest in a Franchise Until You Check Out This List

Taco Bell Photo by Mike Mozart

This post was updated on May 2, 2017 to reflect information from Taco Bell’s 2017 FDD (Item 7).

Detailed Estimates of Taco Bell Franchise Costs Based on Item 7 (Estimated Initial Investment) of Taco Bell’s 2017 Franchise Disclosure Document

For Traditional Units and Power Pumpers

  • This table lists average costs for a traditional unit and the restaurant portion of a power pumper.
  • Note, however, that it does not take into consideration restaurant parking configurations, which may differ at a gas and convenience store location. Nor does it include any of the costs of development of the gas and convenience store portions of the power pumper building, as those portions are separate and distinct from the power pumper unit.
  • Certain security deposits may be refundable. None of the other expenditures are refundable.

1.  Application and Background Check Fee:  $300 to $600 per person

2.  Initial Franchise Fee:  $45,000

  • Franchisees of Traditional Units who qualify for the Rural Incentive Program, the Rural 2.0 Incentive Program, or for the Incremental Growth Incentive Program will benefit from a number of incentives, one of which is the waiver of what would otherwise be an initial franchise fee of $45,000.

3.  First Unit Construction Services:  $26,800

  • For the first Unit that you open, Taco Bell requires that you enter into a Development Services Agreement with YRSG for construction services to be provided by YRSG (or its designee) at a cost of $25,000.
  • You must also pay YRSG directly for all costs, including, but not limited to, soil tests; survey costs; architect, civil engineer, attorney, and consultant costs; ADA inspection costs (which are estimated to cost $1,800, as reflected in the above $26,800 estimate for the cost of First Unit Construction Services); utility permit fees and deposits; etc., in addition to YRSG’s (or its designee’s) expenses for postage and handling of documents, costs in connection with out-of-town travel, long distance calls and faxes, filing and administration fees, data processing, and photographic reproduction techniques.
  • For your second and subsequent Units, you are not required to, but may, sign a Development Services Agreement with YRSG for construction and/or real estate services to be provided by YRSG (or its designee), at the costs provided above, or you may use an approved third-party construction management firm.

4.  Optional Real Estate Services:  $0 to $25,000

  • YRSG (or its designee) also provides real estate services, which are optional at a cost of $25,000.

5.  Permits, Licenses, Security Deposits:  $74,000

  • This amount includes costs for a required Preferred National A&E Consultant to do the A&E work, as described in Item 5, geotechnical services, material testing, architectural services, civil services, permit processing, inspection, utility fees, special impact fees, etc.

6.  Real Property:  $175,000 to $1,400,000

  • The estimates given are for purchased sites. Base rent may range from $20,000 to $135,000 or more per year for a ground lease; costs will be higher if the lease includes percentage rent.
  • Base rent does not include taxes, insurance, and other applicable fees associated with leasing the site.

7.  Building/Site Construction:  $534,500 to $686,000

  • The building and site construction cost estimates are based on development in Dallas, Texas. You will need to adjust your projected costs based on the location where you plan to build, as actual costs vary considerably according to local building and zoning ordinances, prevailing construction costs in the geographic region, size and condition of the site.

8.  Equipment/Signage/Decor/POS:  $271,500 to $290,000

9.  Initial Inventory:  $7,000 to $10,000

  • Opening inventory figures are based on costs for the first week of operation. Costs will vary depending on your actual sales.

10.  Grand Opening Expense:  $5,000

  • You must spend $5,000 within the first 6 months of opening in advertising and promoting the Restaurant in accordance with Taco Bell’s opening procedures, although you may spend more.
  • Upon timely receipt of proofs of expenditure, the franchisor will reimburse you for amounts not to exceed $5,000.

11.  Additional Funds – 3 Months:  $40,000 to $60,000

  • The Additional Funds category includes an estimate of the funds needed to cover incremental operating expenses for the initial three months of business, i.e., costs and expenses that generally occur in the startup period of the business above and beyond the standard costs of operation.
  • These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses starting the business.
  • Additionally, you are responsible for all costs and expenses associated with the required training, including travel and living expenses, etc. for your employees.

12.  Total:  $1,179,100 to $2,622,400

  • Taco Bell relied on its 50 years of experience to compile these estimates for Traditional and Power Pumper Units.

For In-Lines and End-Caps

  • The total estimated initial investment necessary to begin operation of an in-line or end-cap Taco Bell restaurant ranges from $525,100 to $1,091,400.

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