Taco John’s Initial Franchise Fee, Royalty Fee + 22 Other Fees

Detailed Information on Taco John’s Initial Franchise Fee, Royalty Fee + 22 Other Fees (Items 5 and 6, 2021 FDD)

1.  Area Development Fee:  $5,000 multiplied by the number of Taco John’s Restaurants to be developed

• In addition to the Initial Franchise Fee stated below for your initial Taco John’s Restaurant, Taco John’s currently charges a non-refundable development fee (“Development Fee”) of $5,000 multiplied by the number of Taco John’s Restaurants to be developed and operated by you under the Area Development Agreement (“ADA”), payable in a lump sum when you sign the ADA.

• Five Thousand Dollars ($5,000) of the Development Fee will be applied toward the Initial Franchise Fee payable under each Franchise Agreement for your Taco John’s Restaurants executed pursuant to the ADA.

2.  Initial Franchise Fee:  $10,000 to $25,000

• For a traditional Taco John’s Restaurant, Taco John’s currently charges an initial franchise fee (“Initial Franchise Fee”) of $25,000 for your first Taco John’s Restaurant, payable in full when you sign the Franchise Agreement.

• If you are an existing franchisee of Taco John’s and want to open a second or subsequent Taco John’s Restaurant, the Initial Franchise Fee for the traditional Restaurant is currently $20,000, payable in full when you sign the Franchise Agreement.

• Except as is noted above and in situations based on unique facts, the Initial Franchise Fee is imposed uniformly on Taco John’s franchisees who sign the current Franchise Agreement.

• If you sign an ADA with Taco John’s, the Initial Franchise Fee for your second and each subsequent traditional Taco John’s Restaurant is $20,000, payable in full when you sign each Franchise Agreement. Taco John’s will apply $5,000 of your Deposit or Development Fee to the Initial Franchise Fee due when you sign the Franchise Agreement for each Restaurant.

• For a non-traditional Taco John’s Restaurant, Taco John’s currently charges an Initial Franchise Fee of $10,000, payable in full when you sign the Franchise Agreement. If you sign an ADA with Taco John’s, Taco John’s will apply your Development Fee to the Initial Franchise Fee due when you sign the Franchise Agreement for each Restaurant.

3.  Royalty:  5% of Net Sales

• Due Date:  Currently due on the 20th day of each month.

4.  Advertising and Marketing Fees:  4% of Net Sales for traditional Restaurants; 2% of Net Sales for non-traditional Restaurants

• Due Date:  Payable at the same time as the Royalty.

• For traditional Restaurants, Taco John’s may increase this fee upon 60 days’ notice up to a maximum of 4.5% of the Net Sales of the Restaurant during the Initial Term of the Franchise Agreement.

• Taco John’s will not increase this fee for non-traditional Restaurants during the Initial Term of the Franchise Agreement without your consent.

5.  Grand Opening Marketing:  $10,000 (but this may be increased to $20,000 in those markets Taco John’s defines as underpenetrated)

• Due Date:  As incurred.

• You must conduct a grand opening advertising program that Taco John’s approves.

6.  Required Purchases:  will vary under circumstances

• Due Date:  Upon receipt of merchandise or installation of equipment.

• You must purchase only products to be sold from the Restaurant that Taco John’s has approved, and you must purchase only from suppliers and distributors that Taco John’s approves, which may include itself or its affiliates.

7.  The Olé! Way Online Learning Management System License Fee:  $240 per year; may change annually

• Due Date:  Annually.

• Payable to Taco John’s or its third-party online vendor as Taco John’s directs for access to Taco John’s online learning management system called The Olé! Way, which provides you with certain ongoing training materials and access to the Operations Manual.

8.  Gift Card Fee:  in an amount designated by the gift card processor, estimated not to exceed $100 in 2021; but subject to change annually

• Due Date:  Annually.

• You must participate in the Gift Card System and pay Taco John’s a fee which it will submit to the gift card processor on your behalf.

9.  Loyalty Program Fee:  currently none

• Due Date:  As incurred.

• You must, at your expense, participate in Taco John’s customer loyalty program, including honoring loyalty rewards presented in your Restaurant, as the program may be modified from time to time.

10.  Independent Feedback Program Fee:  as designated by the supplier, currently $35 per mystery shop event plus cost of the food; subject to change annually

• Due Date:  As determined.

• Taco John’s has established an independent feedback program to evaluate guest satisfaction of your Restaurant. You must participate in it and pay the fees or charges associated with it. Taco John’s collects this fee from you and submits it to the provider on your behalf.

• Taco John’s has the right to review the results of the service evaluation.

11.  Technology Fee:  currently none

• Due Date:  To be determined.

• Taco John’s may establish this fee to assist with the development of technology upon 60 days’ notice to you. If it does so, this fee will replace The Olé! Way Online Learning Management System License Fee, gift card fee, loyalty program fee, and independent feedback program fee, but will also be used for further development of technology by or for Taco John’s.

• If Taco John’s collects this fee, it will submit a portion of it to the third-party vendors who provide certain of the services covered by this fee on your behalf.

12.  Additional Training:  then-current rate

• Due Date:  As incurred.

• Taco John’s does not charge a fee for initial training and it does not charge any additional fee for training on The Olé! Way system, but it may charge a fee for any other training programs, workshops, or seminars that it may periodically offer and for additional in-unit training requested by a Franchisee from time to time.

13.  Certified Manager Training:  will vary as designated by the supplier you select and the method of training.

• Due Date:  As incurred.

• Your Active Certified Managers must participate in a training program that Taco John’s provides for no charge. They must also obtain a food safety certification through programs offered from third-party suppliers that Taco John’s approves, currently either NEHA or ServSafe.

14.  Insurance Cost Reimbursement:  will vary under circumstances

• Due Date:  As incurred.

• You are required to obtain the insurance Taco John’s requires. If you do not secure or maintain the specified coverage or give Taco John’s evidence of that coverage, it may obtain the insurance and charge you for it and any expenses it incurs.

15.  Transfer Fee:  40% of Taco John’s then-current Initial Franchise Fee

• Due Date:  The earlier of completion of the transfer or the date that the proposed new owner (“Proposed New Owner”) begins training.

• Payable by you or the transferee.

• If the transfer is not completed for any reason, you must reimburse Taco John’s for its costs and expenses associated with your transfer (including those for investigating and processing a Proposed New Owner).

16.  Renewal Fee:  40% of Taco John’s then-current Initial Franchise Fee

• Due Date:  Upon renewal.

• You must pay Taco John’s a renewal fee for each renewal of your Franchise Agreement.

17.  Conceptual Floor Plan and Conceptual Site Plan:  will vary under circumstances

• Due Date:  As incurred.

• Taco John’s will provide one set of conceptual plans at no charge.

• Additional layouts or revisions will be invoiced at Taco John’s then-current rate. Taco John’s current rate is $75.00 per hour to prepare additional layouts or revisions to your conceptual plans.

18.  Site Evaluation and Site Acquisition Support Services:  will vary under circumstances

• Due Date:  As incurred.

• Taco John’s may require you to reimburse it for actual expenses if it assists you with site evaluation and site acquisition support if you request its assistance.

19.  Temporary Management Fee:  will vary under circumstances

• Due Date:  As incurred.

• If you cannot operate your Restaurant due to death or permanent disability, Taco John’s may appoint a manager and charge you a fee for the management services of 15% of the net sales for the days it managed the Restaurant.

20.  Advertising Cooperative Bookkeeping Fee:  optional, but if obtained, currently $110 to $200 per month, depending on the amount of services provided

• Due Date:  As incurred.

• If an Advertising Cooperative requests Taco John’s to provide bookkeeping services to it, it pays Taco John’s this fee.

21.  Relocation Fee:  15% of Taco John’s then-current Initial Franchise Fee (or, for a non-traditional location, the amount of Taco John’s actual costs and expenses related to the relocation, not to exceed 15% of Taco John’s then-current Initial Franchise Fee)

• Due Date:  At time of the commencement of relocation process.

• If you lose the right to possess the Premises, you request relocation of the Restaurant, or Taco John’s determines that your current location is not suitable under its standards, you may relocate to a site which meets Taco John’s then-current criteria and is approved by Taco John’s.

• Taco John’s may charge you this fee for its time and efforts in approving your new location, regardless if a relocation actually occurs.

22.  Interest on Late Payments:  not more than 1.5% on amounts due per month

• Due Date:  As incurred.

• After the date that they are due, all payments you owe to Taco John’s or its affiliates will bear interest of up to 1.5% per month.

23.  Remodeling Expenses:  varies

• Due Date:  As incurred.

• At Taco John’s request, you must remodel, reimage, expand, redecorate, re-equip, and/or refurbish the Premises and the Restaurant to reflect changes in the operations of Taco John’s Restaurants, which Taco John’s prescribes and requires of new Franchisees.

• Taco John’s currently cannot estimate a range of these expenses.

• Material alterations will not be required more often than once every 10 years, except upon a transfer, although maintenance and repair of the Restaurant are required on an ongoing basis.

24.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse Taco John’s if it defends against or is held liable for claims that arise from your Restaurant operations unless your operations were in strict compliance with Taco John’s Operations Manual, standards, or procedures or the claims result from negligence or willful or reckless misconduct on Taco John’s part or on the part of its agents.