Updated September 15, 2019.

Detailed Estimates of Chronic Tacos Franchise Costs Based on Item 7 (Estimated Initial Investment) of Chronic Tacos’ 2019 Franchise Disclosure Document

Build-Out Costs

• This category includes items such as an alarm system, electronic cash register, dining room furniture, janitorial equipment, food preparation and other kitchen equipment, and major appliances.

• It also includes equipment lease deposits, sales tax deposits or bonds, construction permits, sewer hookup charges, and utility deposits.

• If your location has a larger than customary square footage or you must deal with unusual structural issues during your build-out, your costs may be greater than the range provided.

1.  Permits and Licenses:  $3,000 to $8,000

2.  Leasehold Construction:  $110,000 to $450,000

• After you sign a lease for the site of your Taco Restaurant and before you begin any construction or renovation of the site, you must pay the franchisor $3,000 which it will use to pay its approved designer to design your site to conform with the franchisor’s standard architectural plans and specifications.

• These estimates are for the costs incurred for construction and remodeling a location to conform to the franchisor’s current standards, including a general contractor’s fee (generally equal to 10% to 15% of total construction costs); contractor’s insurance; materials and supplies; tools; labor and subcontractor fees; other costs to construct leasehold improvements which conform to the franchisor’s standards, including hiring an architect and MEP engineer that the franchisor approves; and the $3,000 fee you must pay to the franchisor, which it will pay to its approved designer.

• These estimates presume that you will receive a “vanilla shell” from your landlord for your Taco Restaurant.

Furniture, Fixtures, Equipment, and Signage

• You must prepare and sell all of the menu items that the franchisor designates as part of its standard menu and provide all standard services it designates. You must purchase any additional equipment or fixtures necessary to provide these services or menu items, the cost of which may be significant.

• If you wish to provide Catering Services from your Chronic Tacos Restaurant, the franchisor estimates the cost for additional supplies (such as chafing dishes, warmers, and other supplies) will be $2,000 to $4,000.

3.  Signage:  $7,500 to $10,000

4.  POS System/Audio/Video/Digital Menus:  $8,000 to $20,000

• This estimate includes the point-of-sale (POS) system, security cameras, wide screen televisions, and a sound system. Currently, the franchisor requires you to purchase its integrated POS System from Auphan. It will cost you between $4,500 and $12,000 to buy the POS System and $60 and $200 per month for maintenance and update requirements.

5.  Equipment; Furniture:  $70,000 to $140,000

6.  Opening Inventory:  $10,000 to $20,000

7.  Uniforms:  $500

8.  Grand Opening Advertising:  $3,000 to $5,000

• At least 60 days before the opening of your Taco Restaurant, you must submit a grand opening required spending plan (“Grand Opening Plan”) to the franchisor, which outlines your proposal for grand opening marketing and promotion of your Taco Restaurant.

• You must obtain the franchisor’s written consent to the Grand Opening Plan before you implement it. You must modify the Grand Opening Plan as the franchisor requests, and, thereafter, you may not make any substantial changes to the Grand Opening Plan without the franchisor’s advance written consent.

• You must, during the period beginning 30 days before the scheduled opening of your Taco Restaurant and continuing for 15 days after your Taco Restaurant opens for business, spend $7,000 to $10,000 to conduct grand opening marketing and promotion for your Taco Restaurant.

Other Expenses

9.  Chronic Tacos Restaurant Premises (Lease Deposit and First 3 Months’ Rent):  $15,000 to $40,000

• These estimates assume that your location will be a leased, unimproved, unfinished retail store-type unit. The estimates are based on the assumption that the premises will be rented and that, in addition to rent payments, the landlord will require a lease deposit equal to two months’ rent.

• A typical Chronic Tacos Restaurant will be located in a suburban area on a major thoroughfare or adjacent to or part of a suburban shopping center.

• The typical location will be 1,200 to 1,800 square feet. Monthly lease payments usually range from $3,000 to $8,000.

10.  Insurance – Liability and Workers’ Compensation (initial deposit):  $5,000 to $10,000

11.  Legal Fees/Organizational Expenses:  $2,000 to $5,500

• This estimate includes legal review and negotiation of the lease for the franchised Chronic Tacos Restaurant and accounting assistance in setting up your books.

• This estimate includes legal review and negotiation of the lease for the Franchised Location and accounting assistance in setting up your books.

12.  Initial Franchise Fee:  $40,000

• The Initial Franchise Fee is $40,000 for your first Chronic Tacos Restaurant.

• Your designated trainees must complete the franchisor’s Pre-Opening Initial Training Program to the franchisor’s satisfaction for you to be eligible to become a franchisee. You will also be responsible for costs of travel, living, compensation, and other expenses during the Initial Training Program.

13.  Additional Funds (3 months):  $20,000 to $50,000

• The estimates provided above include employee wages, including 6-8 weeks’ pre-opening training for 2 supervisorial or managerial personnel, opening cash, and other miscellaneous expenses incurred before opening and during the first 3 months of operations.

• These estimates do not take into account (i) finance charges, interest, and related costs you may incur if any portion of the initial investment is financed, or (ii) the costs of a security system, which the franchisor estimates will cost between $500 to $750 per month to lease, or music system, which the franchisor estimates to cost between $450 and $500 per month to lease.

14.  Grand Total:  $294,000 to $799,000