Mikes Red Tacos
Mikes Red Tacos offers street-inspired tacos and Mexican cuisine in a fast-casual format through Area Development Franchises. Known for birria-inspired menu items, this franchise targets multi-unit operations with significant investment requirements.
Mikes Red Tacos franchise FAQ
How much does it cost to open one — the total initial investment?
The total estimated initial investment for opening one Mike's Red Tacos Restaurant ranges from $639,800 to $1,988,000. This includes the Initial Franchise Fees and other startup expenses as detailed in [p.26] and [p.1].
What is the initial franchise fee?
The initial franchise fee for a Mike's Red Tacos Restaurant, whether it is a Traditional or Non-Traditional one, is $40,000 [p.11]. This fee covers pre-opening assistance and offsets some of the franchisor’s recruitment expenses [p.11].
What are the ongoing royalty and advertising fees?
The ongoing royalty is a continuing payment equal to 5% of Franchisee's Gross Sales each week, allowing Franchisees to use the Marks and receive support from the franchisor [p.81]. Additionally, Franchisees must contribute 3% (which can be increased to 4%) of their weekly Gross Sales to the Creative Fund for marketing and promotional activities [p.35-36], with 20% retained by the franchisor for administration [p.102].
How long is the initial franchise agreement, and can I renew it?
The duration of the initial franchise agreement isn't specified in these excerpts. However, [p.79] indicates that there are provisions for renewal fees and successor agreements, suggesting that the initial term may be less than the period covered by a renewal fee requirement. This isn't specified in the provided excerpts.
Can I sell or transfer my franchise, and what does that require?
A franchisor can refuse to permit a transfer of ownership of a franchise except for good cause. Good cause includes but is not limited to specific reasons outlined in the FDD [p.5]. Additionally, if you wish to transfer your franchise, you must submit a request and pay a non-refundable $2,500 deposit. If approved, you will also need to pay an additional administrative/transfer fee which is 50% of the current initial franchise fee or $20,000 if the franchisor is not offering franchises at the time of your transfer [p.121].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the franchise agreement if there is a failure by the franchisee to comply with any lawful provision of the franchise agreement and such failure is not cured within a reasonable time, which cannot exceed 30 days [p.209]. Additionally, termination without 'reasonable cause' as defined under Virginia law may be unlawful [p.208].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
Based on the excerpts, you may receive limited protected rights within a defined territory ('Territory'), but this is not guaranteed. If granted, your Territory will be described in your Franchise Agreement and may overlap with another franchisee's territory [p.42]. You do not receive an exclusive development area or exclusive territory [p.44, p.77], and you may face competition from other franchisees, Non-Traditional Venues, or competitive brands controlled by the company [p.44].
What training and ongoing support does the franchisor provide?
The franchisor provides an Initial Training Program at their facilities in California, or another location specified by them. This is followed by an Extra Practice Week training program held at least 60 days before a new restaurant opens. Online training is also included. The franchisor may waive the certification fees for the first CT, NRO Leader, and CFTR. For additional certifications, re-certifications, or multiple attempts, franchisees must pay current fees. All personnel attending training must complete the 'ServSafe Manager' program. This training is required to be completed before a new restaurant can open. [p.236, p.91]
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?
The franchisor may provide financial performance information about actual records of an existing outlet you are considering buying. However, they do not make any additional financial performance representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets [p.58]. If you receive any other financial performance information or projections, you should report it to the franchisor’s management [p.58].
What am I restricted to selling, and where must I buy supplies?
You are restricted to selling only those products and services authorized by the franchisor, which may vary based on factors like operating season and geographic location [p.49]. You must purchase or lease all required items from designated sources, approved suppliers, or the franchisor itself, unless otherwise specified in the Operations Manual or other writing [p.27].