The franchise industry represents a multi-billion dollar sector in the United States. Among the various types of franchises, restaurant franchises are particularly popular. The Taco Bell franchise provides franchising opportunities for qualified individuals.
If you’re considering owning a Taco Bell franchise, there are several important points to understand. This article will address some of the most common questions regarding Taco Bell franchising. Let’s dive in!
Basic Facts About Taco Bell Franchises
Taco Bell is a fast-food chain established in 1962 by Glen Bell, specializing in tacos, burritos, and other Mexican-inspired dishes. The taco bell franchise started offering franchising opportunities in 1964 and operates as a subsidiary of Yum! Brands also owns KFC, Pizza Hut, and The Habit Burger Grill.
The 7,900 Taco Bell locations serve more than six billion customers yearly throughout 31 countries worldwide.
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Taco Bell Franchise Cost
As with most franchises, there are many costs associated with starting up Taco Bell restaurants. The current initial franchise fee for a Taco Bell franchise ranges from $25,000 to just under $50,000. The fee varies depending on the specific location and other details of the franchise.
Taco Bell Franchise Fees
In order to open a Taco Bell franchise, an initial investment of $530,000 to almost $3 million is required, in addition to land and lease costs. The franchise fee is included in this investment range. Ongoing fees include royalties (5.5% of sales), marketing fees (4.25% of sales), and trainee fees for new staff ($350 per person).
The franchise agreement outlines these fees and responsibilities for franchisees.
Taco Bell Franchise Profit
According to Statista, each Taco Bell franchise typically earns around $1.6 million in gross profit annually per unit. With approximately 7,900 Taco Bell restaurants operating globally, the total gross profit generated by the corporation from its franchised locations amounts to about $12.6 billion each year.
Taco Bell Franchise Owner Salary
Taco Bell franchise owners earn about $80,000 to $100,000 per restaurant yearly. This is pre-tax income, so the actual take-home pay will be less.
While this isn’t a huge yearly salary, Taco Bell fast food franchise owners still earn almost double what the average American takes home. According to TheStreet, the average American brings home about $48,672 per year.
Taco Bell Franchise Requirements
Just like most franchise opportunities available, Taco Bell has many requirements that must be met in order to be eligible for franchising. Let’s take a look at them…
Net Worth
Taco Bell mandates that all prospective franchisees possess a net worth of at least $1.5 million. This net worth is calculated by taking the total value of all your assets (such as home equity, savings, stocks, etc.) and subtracting any debts and other liabilities.
Liquid Assets
Taco Bell also requires that all potential franchisees have at least $750,000 in liquid assets. This is cash on hand or assets that can be quickly converted to cash (like investments that can be sold quickly).
Restaurant Experience
Taco Bell encourages franchisees to have prior experience in the restaurant industry; however, this is not a strict requirement. If you lack experience in this field, Taco Bell mandates that you complete an accredited management training program prior to launching your franchise.
Adequate Capitalization
As we’ve already discussed, Taco Bell requires that all potential franchisees have adequate capitalization.
This means that you must have enough money to cover the initial franchise fee, total initial investment, and any ongoing expenses. To recap, expenses include at least $25,000 for the franchise fee, with your initial investment ranging from $530,000 to almost $3 million.
Taco Bell Franchise Training
All new Taco Bell franchisees are required to complete an accredited management training program. This program is designed to teach you everything you need to know about running a Taco Bell franchise, from restaurant operations to marketing and sales.
Taco Bell Franchise Agreement
Once you’ve met all the requirements and gone through the training program, you’ll be asked to sign a franchise agreement. This agreement outlines your rights and responsibilities as a Taco Bell franchisee. It also outlines the fees you’ll be required to pay, as well as the terms of your agreement.
Taco Bell Franchise Renewal
The Taco Bell franchise agreement lasts for 25 years, with an option to extend for another 25 years. To renew your franchise agreement, you must fulfill all the conditions specified in your initial agreement, along with the requirements detailed in Taco Bell’s current Franchise Disclosure Document.
Application and Background Check
There is an application and background check fee which ranges from $350 to $600. This fee is due for each person who will be listed on the application and is non-refundable.
Permits, Licenses, Security Deposits
You will also be responsible for obtaining all the necessary permits, licenses, and security deposits for your Taco Bell franchise. You can expect to pay about $74,000 for these.
Insurance Expense Actual Cost
You will need to obtain specific insurance policies for your Taco Bell franchise. The expenses associated with these policies will vary based on the location of your restaurant, as well as its size and type.
Real Property
To establish a Taco Bell franchise, you must lease or purchase real estate. The cost will vary based on the location and size of your restaurant, typically ranging from $20,000 to $1.4 million.
Build-Out Costs
Once you’ve secured your real property, you’ll need to build out your restaurant. The cost of this will vary, but you can expect to pay anywhere from $177,000 to $900,000.
Third-Party Transfer Fee
If you choose to sell your Taco Bell franchise, you will be required to pay a transfer fee of $7,500 for each unit up to five maximum. For six or more units, the transfer fee will be $1,500 each.
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Is Opening a Taco Bell Restaurant Worth It?
This is a difficult question to answer, as it depends on many factors.
If you have the required capital and experience, and you’re confident in your ability to run a successful business, then a Taco Bell franchise could be a great opportunity for you.
However, if you’re not sure if you can meet the requirements or if you’re not confident in your ability to run a successful business, then opening a Taco Bell franchise may not be the best option for you.
There are many other franchise opportunities available with a much lower initial investment.
Image: Depositphotos
This article, "Taco Bell Franchise Ownership FAQs" was first published on Small Business Trends
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