El Pollo Loco
El Pollo Loco offers fire-grilled chicken restaurants; known for quick-service and flavorful Mexican-inspired cuisine in the fast-food industry.
About El Pollo Loco
El Pollo Loco is the name of three independent restaurant chains that specialize in Mexican-style grilled chicken. The Mexican and American companies were founded by Juan Francisco Ochoa while the Filipino company began as a franchisee of the American company in 1991 that later broke free of its contract and was allowed to retain its trademarks within the Philippines in 2016.
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El Pollo Loco franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of an El Pollo Loco® Restaurant under a Franchise Agreement ranges from $793,750 to $2,685,500. This includes costs such as the initial franchise fee and additional fees for training materials and support during the opening process [p.1, p.62].
What is the initial franchise fee?
The initial franchise fee for each Restaurant is $40,000 (the 'Initial Fee'). This fee is uniform for all franchises presently being offered, except those developed under a multi-unit Development Agreement. [p.19]
What are the ongoing royalty and advertising fees?
The ongoing fees include a sales-based royalty fee and a sales-based advertising fee. These fees are considered variable consideration and are recognized as revenue as such sales are earned by the franchisees [p.391]. The advertising fee may be allocated to a Local Advertising Fund if the Restaurant is located outside the LA DMA, with Franchisor having final approval on local marketing plans [p.64, p.148].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement typically lasts for 20 years [p.134]. After the initial term, you may have the opportunity to obtain a successor franchise agreement upon expiration under certain conditions specified in Section 20 of the FDD [p.390] and [p.134].
Can I sell or transfer my franchise, and what does that require?
To sell or transfer your franchise, you must obtain written approval from the franchisor [p.170]. The transferee must also meet certain qualifications and undergo training. If the franchisor disapproves of an heir or beneficiary, they have 12 months to find another acceptable assignee; otherwise, the agreement may be terminated [p.170].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on any grounds available by law [p.118]. This includes failure of the franchisee to comply with lawful provisions of the franchise agreement, which must be cured within a reasonable time frame after written notice [p.113]. However, termination without 'reasonable cause' as defined by Virginia Retail Franchising Act or Virginia laws may not be enforceable [p.121].
What financial requirements — net worth and liquid capital — do I need to qualify?
To qualify as a new franchisee, you must possess a favorable credit rating, be economically capable of carrying on the Restaurant business, and have sufficient net worth as required by the franchisor [p.167]. However, specific net worth requirements are not detailed in these excerpts. This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory under the Franchise Agreement or Development Agreement. You may face competition from other franchisees, outlets owned by the franchisor, or other competitive brands [p.72]. Additionally, upon expiration or termination of your agreement, the franchisor has the right to open restaurants in your territory or authorize others to do so [p.336].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training programs [p.61] that include hands-on management and operation training conducted by a certified corporate training expert. For new restaurants, the franchisor also offers New Restaurant Opening Support (NRO Support) [p.63], which includes sending personnel to assist with the opening at a cost of $30,000. Ongoing support may involve additional training beyond initial NRO Support, but this is at the franchisee's cost and discretion. The franchisor also requires the purchase and use of specific computer systems for the restaurant [p.37], with in-store training provided by EPL or a designated representative.
How many franchised outlets are there, and how many have closed or been terminated?
This isn't specified in the excerpts.
Does the franchisor share any financial performance or earnings information?
Yes, the franchisor can provide financial performance information. According to [p.91], this information can be included in the disclosure document if there is a reasonable basis for it. Additionally, the franchisor may provide actual records of an existing outlet being considered for purchase or supplement the information provided in Item 19 with specific location or circumstance details.
What am I restricted to selling, and where must I buy supplies?
You are not specifically restricted to selling any particular items, but you must conform to the franchisor's specifications and quality standards for food products, beverages, supplies, and materials [p.44]. You must purchase these from approved suppliers and distributors [p.44, p.137]. This includes signs which should reflect the current image of El Pollo Loco® restaurants and require prior written consent to place additional ones [p.137].