On The Border
On The Border offers full-service Mexican and Tex-Mex casual dining restaurants, known for their extensive menu and bar service. Part of the quick-serve restaurant industry, it provides franchises with substantial investment opportunities.
On The Border franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment for opening an OTB Restaurant can vary significantly depending on several factors. According to [p.30], you should expect to make an initial investment in at least the amount summarized in the tables provided, which includes the construction of a new full-service OTB Restaurant or the acquisition and conversion of an existing restaurant. However, specific costs may differ based on location, market conditions, and other factors.
What is the initial franchise fee?
The initial franchise fee is $30,000. A deposit of $10,000 is due upon signing the Franchise Agreement, and the remaining $20,000 is due within thirty days of opening your franchise. [p.16, p.109]
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is four percent (4%) of the Restaurant's Gross Sales for the prior week, recognized each week during the term of the agreement [p.110]. Advertising costs are expensed as incurred, with amounts ranging from approximately $5.1 million to $6.2 million annually [p.194].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement lasts for an unspecified term during which Franchisee must be in material compliance with the terms. Provided such compliance, Franchisee may elect to renew the franchise for two additional ten-year terms [p.99].
Can I sell or transfer my franchise, and what does that require?
You can transfer your franchise rights, but it requires payment of a transfer fee which varies based on the circumstances [p.22]. Additionally, the franchisor may refuse to permit transfers for good cause [p.5], and certain transfers of development rights are prohibited under any circumstances [p.147].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on grounds such as the franchisee's failure to comply with any lawful provision of the franchise agreement and failing to cure such failure after being given written notice and a reasonable opportunity, which cannot exceed 30 days [p.5]. Additionally, the agreement allows termination without specific cause prior to expiration [p.218], though this isn't detailed further in the provided excerpts.
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD does not provide specific net worth or liquid capital requirements for franchisees to qualify. However, it mentions that your credit history could impact the amount of funds needed during the start-up phase [p.30], and you must execute the Franchise Agreement at least ten days prior to commencing construction if entering a Development Rights Rider [p.39].
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory. Instead, you will receive a Protected Area defined as the lesser of a two and one-half (2½) mile radius around your restaurant or a smaller radius determined by OTB. This area excludes Non-traditional Locations, and you may face competition from other franchisees, outlets owned by OTB, or other channels of distribution or competitive brands controlled by OTB. [p.51, p.95, p.52, p.50]
What training and ongoing support does the franchisor provide?
The franchisor provides initial training through manuals and an online learning management system, Lime Life [p.49]. Ongoing support includes pre-opening assistance, and the franchisee is required to hire a manager who personally participates in the operation of the restaurant [p.58]. Additionally, the franchisor may provide support and assistance to maintain uniform operating standards [p.102].
How many franchised outlets are there, and how many have closed or been terminated?
The number of franchised outlets is not specified in the excerpts. Additionally, nine corporate-owned and operated locations have closed since December 26, 2023, but the number of terminated franchises is not provided [p.86].
Does the franchisor share any financial performance or earnings information?
Yes, the franchisor shares financial performance information based on gross sales reported by franchisees [p.71]. However, this information is not audited, and the franchisor does not provide detailed costs or expenses that must be deducted from gross revenue to obtain net income [p.202]. This isn't specified in the excerpts for international locations like South Korea [p.80].
What am I restricted to selling, and where must I buy supplies?
You are generally not restricted to selling specific items, but the franchise agreement may prohibit you from operating a similar business during the term of the franchise. Regarding supplies, you may have to buy or lease certain items from the franchisor or a limited group of suppliers they designate, which might be more expensive than purchasing elsewhere [p.3]. However, you can purchase products and other items from alternate suppliers that meet specified criteria after obtaining approval from the franchisor [p.35].