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Considering a Chronic Tacos Franchise? Don’t Overlook These 25 Important Franchise Fees

by Franchise Chatter on November 14, 2017

in Franchise Fees, Mexican Restaurant Franchise



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If you are considering a Chronic Tacos franchise, don’t get blindsided by these 25 important franchise fees (from the initial franchise fee, to the royalty fee, to 23 other fees found in Items 5 and 6 of Chronic Tacos’ 2017 FDD).

1.  Initial Franchise Fee:  $40,000



  • You must pay Chronic Tacos an initial franchise fee (the “Initial Franchise Fee”) of $40,000 for your first single Chronic Tacos Restaurant when you sign the Franchise Agreement.
  • If you are signing the Franchise Agreement with the renewal of an existing Franchise, you will pay a renewal fee in lieu of an Initial Franchise Fee when you sign the renewal Franchise Agreement as provided in your existing Franchise Agreement.

2.  Development Fee:  $10,000 for the second Chronic Tacos Restaurant and each subsequent Chronic Tacos Restaurant thereafter to be opened under the Area Development Agreement

  • When you sign the Area Development Agreement for a minimum of 2 Chronic Tacos Restaurants, you must pay Chronic Tacos a development fee (the “Development Fee”) of $10,000 for the second Chronic Tacos Restaurant and each subsequent Chronic Tacos Restaurant thereafter to be opened under the Area Development Agreement.
  • You must also sign a separate Franchise Agreement for each Chronic Tacos Restaurant to be opened under the Area Development Agreement.
  • When you sign the Franchise Agreement for your first Chronic Tacos Restaurant, you must pay Chronic Tacos an Initial Franchise Fee of $35,000. When you sign the Franchise Agreement for your second and each subsequent Chronic Tacos Restaurant to be opened under the Area Development Agreement, you must pay Chronic Tacos an Initial Franchise Fee of $25,000, less the Development Fee credit.
  • The maximum Development Fee credit for the second and each subsequent Chronic Tacos Restaurant is $10,000.

3.  Continuing Royalty Fee:  greater of 6% of Gross Sales of the Chronic Tacos Restaurant or $600 per week

  • Due Date:  Wednesday of each week on the Gross Sales of the Chronic Tacos Restaurant during the previous week.

4.  Chronic Tacos Advertising Fund Fee:  greater of 2% of Gross Sales of the Chronic Tacos Restaurant or $100 per week

  • Due Date:  On or before Wednesday of each week based on the Gross Sales of the Chronic Tacos Restaurant during the previous week.
  • Payable to Chronic Tacos to be administered through its Advertising Fund.
  • Chronic Tacos reserves the right to increase the Advertising Fund Fee up to the greater of 3% of Gross Sales or $300 per week, upon 90 days’ written notice to you.

5.  Local Advertising:  currently, 1% of Gross Sales of the Chronic Tacos Restaurant

  • Due Date:  As arranged.
  • You must spend the required local advertising expenditure each calendar quarter on local advertising and promotion of the Chronic Tacos Restaurant.
  • Chronic Tacos reserves the right to increase the local advertising expenditure up to 3% of Gross Sales, upon 30 days’ written notice to you.

6.  Cooperative Advertising:  as determined by each Co-Op Advertising Region; but not to exceed 2% of Gross Sales

  • Due Date:  Established by Chronic Tacos.
  • You must contribute to the Co-Op if Chronic Tacos establishes a Co-Op Advertising Coverage Area for the region where your Chronic Tacos Restaurant is located. Any amount you must contribute to the Co-Op will be credited against the amount which you must spend on local advertising.

7.  Late Charge:  $200 plus 1-1/2% on the amount outstanding per month, not to exceed the maximum interest rate allowed by law, from the date payment was due until paid in full



  • Due Date:  Continues to accrue until paid.
  • Payable only if any check, draft, electronic, or other payment is unpaid because of insufficient funds or if any sums due to Chronic Tacos are not paid promptly when due.

8.  Design Fee:  $3,000

  • Due Date:  Immediately after you sign the lease for the site of your Chronic Tacos Restaurant, before you begin any construction or renovation of the site.
  • Chronic Tacos will use this fee to pay its approved designer. You will work with this designer to finalize architectural and engineering drawings to conform the site of your Chronic Tacos Restaurant to Chronic Tacos’ standard architectural and design plans and specifications.

9.  Additional Training Program:  $300 per day plus Chronic Tacos’ out-of-pocket expenses, including transportation, food, and lodging

  • Due Date:  On demand.
  • Chronic Tacos may require you and your supervisorial or managerial employees to attend additional and remedial training programs, at its discretion.
  • You must pay Chronic Tacos its then-current daily fee for each of its representatives that provides additional training. You must also pay for all transportation costs, food, lodging, and similar costs incurred in connection with attending any Additional Training Programs.

10.  Opening Assistance:  no charge for your first Chronic Tacos Restaurant; then, a fee established by Chronic Tacos (currently $300 per person, per day) plus its out-of-pocket expenses, including transportation, food, and lodging

  • Due Date:  On demand.
  • Chronic Tacos will provide you with a 2-person opening assistance team to assist you for up to 1 week before and 2 weeks after the opening date of your first Chronic Tacos Restaurant.
  • You must pay Chronic Tacos its then-current daily fee to provide the Opening Assistance Team if the Opening Assistance Team remains at your Chronic Tacos Restaurant for more than 2 weeks, or if you ask Chronic Tacos to provide you with an Opening Assistance Team for your second or subsequent Chronic Tacos Restaurants.
  • You must also pay all transportation costs, food, lodging, and similar costs incurred for the Opening Assistance Team.

11.  Consultation Fee:  currently, $500 per day

  • Due Date:  On demand.
  • Chronic Tacos may provide regular consultation and advice to you in response to your inquiries regarding administrative and operating issues.
  • You must pay all transportation costs, food, lodging, and similar costs that may be incurred by Chronic Tacos to provide these services.

12.  Manual Replacement Fee:  $500

  • Due Date:  On demand.
  • Payable if you misplace the Manuals or fail to return them to Chronic Tacos upon demand.

13.  Inspection Fee:  $500 per re-inspection



  • Due Date:  On demand.
  • Payable if Chronic Tacos must revisit the Chronic Tacos Restaurant for another inspection after you have already been notified of any deficiency or unsatisfactory condition at the Chronic Tacos Restaurant, including quality, cleanliness, service, and health.

14.  Insurance:  amount of unpaid premiums and Chronic Tacos’ out-of-pocket costs

  • Due Date:  On demand.
  • Payable only if you fail to maintain required insurance coverage and Chronic Tacos elects to obtain coverage for you.

15.  Transfer Fee (Franchise Agreement and Area Development Agreement):  $15,000

  • Due Date:  Before transfer.
  • Payable if you transfer/assign your Franchise Agreement or Area Development Agreement.

16.  Non-Cash Payment System:  all costs associated with non-cash payment systems

  • Due Date:  As incurred.
  • You must accept debit cards, credit cards, stored value gift cards, or other non-cash payment systems Chronic Tacos specifies to enable customers to purchase authorized products.

17.  Liquidated Damages:  an amount equal to twice the total royalty fees paid (or if unpaid, payable) by you during the 12 months immediately preceding the effective date of termination

  • Due Date:  Within 30 days following the date of termination.
  • Payable only if you default and Chronic Tacos terminates the Franchise Agreement.

18.  Default Reimbursement:  Chronic Tacos’ costs and expenses from your default

  • Due Date:  Within 5 days after you cure your default or on demand if the default is not cured.
  • Payable only if you default under the Franchise Agreement.

19.  Audit:  cost of audit, plus interest at the highest rate allowed by law (not to exceed 18%)

  • Due Date:  On demand.
  • Payable only if audit shows an understatement of 3% or more of Gross Sales.

20.  Interim Management Fee:  to be determined

  • Due Date:  As incurred.
  • If you are in default under the Franchise Agreement, and Chronic Tacos elects to assume interim management of your Chronic Tacos Restaurant during the pendency of any cure period or in lieu of immediately terminating your Franchise Agreement, Chronic Tacos may charge you a reasonable fee for management services.

21.  Renewal Fee (Traditional Chronic Tacos Restaurants):  $5,000

  • Due Date:  When you deliver a renewal notice to Chronic Tacos for your Franchise Agreement.
  • This $5,000 renewal fee will be in lieu of the Initial Franchise Fee payable when you “renew” your Franchise Agreement.

22.  Renewal Fee (Area Development Agreement):  $15,000

  • Due Date:  When you deliver a renewal notice to Chronic Tacos for your Area Development Agreement.

23.  Gross-Up Fees:  varies with circumstances

  • Due Date:  On demand.
  • To ensure that Chronic Tacos receives a full 6% of Gross Sales (or $600) as a Continuing Royalty Fee and the full Advertising Fund Fee that is due, you must pay Chronic Tacos, whether in arrears, in advance, in a lump sum, or in the same manner that you pay it the Continuing Royalty Fees and Advertising Fund Fees, the amount of all taxes it must pay on revenue it earns or collects based upon your use of its intellectual property or other intangibles or based upon the existence of the Franchise Agreement.

24.  New Product and Supplier Testing:  actual cost of inspection and testing; $1,000 must be paid as a deposit

  • Due Date:  As incurred, with the $1,000 fee paid as a deposit before inspection.
  • If you propose to purchase any goods or materials from a supplier that Chronic Tacos has not previously approved, you must submit a written request to Chronic Tacos for approval or you must request the supplier itself to do so.
  • Chronic Tacos has the right to require, as a condition of its approval, that its representatives are permitted to inspect the supplier’s facilities, and that you deliver to it and/or to an independent, certified laboratory designated by it, all information, specifications, and samples that it designates for testing.
  • You must pay Chronic Tacos a fee which will not exceed the actual cost of the inspection and testing.

25.  Technology Fee:  $50 to $200 per week

  • Due Date:  Weekly.
  • Includes cost for support for your POS system, loyalty program, and online ordering, and Chronic Tacos’ development and maintenance of online management platforms and corporate intranet, including a trading platform and marketing portal.
  • Chronic Tacos may, on 30 days’ written notice to you, increase the amount of the Technology Fee to an amount not to exceed $200 per week.

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