Qdoba
Qdoba offers quick-service or fast-casual Mexican restaurants, known for their build-your-own menu options. As part of the quick-service restaurant industry, Qdoba provides franchises with the opportunity to operate under a recognized brand.
About Qdoba
Qdoba is a chain of fast casual restaurants in the United States and Canada serving Mexican-style cuisine. After 15 years as a wholly owned subsidiary of Jack in the Box, the company was sold to a consortium of funds led by Apollo Global Management in March 2018. In October 2022, Qdoba was acquired by Butterfly Equity. At the time of the acquisition, Qdoba had nearly 750 locations across North America. It is the No. 2 player and No. 1 franchisor of Mexican fast-casual dining in North America.
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Qdoba franchise FAQ
How much does it cost to open one — the total initial investment?
The total estimated initial investment for developing one Traditional Qdoba restaurant ranges from $546,500 to $1,299,000. This includes a development fee of $10,000 and covers the costs associated with opening a restaurant based on a 1,500 to 3,000 square foot space using current design elements [p.1, p.26].
What is the initial franchise fee?
The initial franchise fee is $40,000 for traditional units (as stated on [p.16]). This fee is nonrefundable and fully earned upon payment (refer to [p.193] and [p.16]). It covers administrative and other expenses incurred by the company in granting the franchise and compensates for lost or deferred opportunities to franchise to others ([p.193]).
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is based on a percentage of franchise restaurant sales, currently set at six percent (6%) net of certain taxes [p.265]. For local advertising, franchisees are required to spend one and a quarter percent (1.25%) of Gross Sales on an ongoing basis, with the requirement to obtain prior written approval for any advertising material before use [p.36].
How long is the initial franchise agreement, and can I renew it?
The initial term of the franchise agreement is not specified in the excerpts. However, assuming the Concession Agreement with the facility has been renewed or extended, the franchisee is granted an option to renew the agreement for the lesser of ten years or the term of any renewed Concession Agreement, subject to certain conditions [p.263].
Can I sell or transfer my franchise, and what does that require?
This isn't specified in the excerpts. The provided FDD sections do not detail the process or requirements for selling or transferring a franchise.
On what grounds can the franchisor terminate the agreement?
The franchisor may terminate the agreement on any grounds available by law [p.396]. Additionally, the franchisor can change its business model without your consent, which might require additional investments or harm your business [p.3], though this does not automatically lead to termination. Other specific terms and conditions for termination are not detailed in these excerpts.
What financial requirements — net worth and liquid capital — do I need to qualify?
To qualify as a franchisee, you must demonstrate adequate financial resources and capital to operate the business, including having a good credit rating and meeting the Company's financial standards. These standards are not detailed in the excerpts but generally include having sufficient net worth and liquid capital to meet the franchisor’s requirements [p.224].
Do I get an exclusive or protected territory?
You receive a protected territory under the Franchise Agreement, which is generally a radius of two miles from your franchised restaurant but can vary. This protected area does not depend on achieving specific sales volumes and cannot be altered without mutual consent. However, this protection comes with exceptions for pre-existing Qdoba franchises, company-owned restaurants, and certain non-traditional locations [p.43-44]. There is no exclusive territory provided under the Development Agreement or Franchise Agreement [p.403, 43-44].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training programs that are proficiency-based rather than time-based [p.43]. They also offer materials and assistance in designing training programs for new franchisees [p.39], and have the right to review these programs periodically to ensure quality [p.39]. Ongoing support includes management of the advertising fund contributions, development of training materials and menu items, and restaurant monitoring as part of the ongoing services provided under the franchise agreement [p.104].
How many franchised outlets are there, and how many have closed or been terminated?
This isn't specified in the excerpts. The provided FDD excerpts discuss sales data for open franchised Qdoba restaurants but do not provide information on the total number of franchised outlets or those that have closed or been terminated.
Does the franchisor share any financial performance or earnings information?
The franchisor may provide actual records of an existing outlet's financial performance if you are purchasing one. However, they do not make any representations about a franchisee's future financial performance or past financial performance of company-owned or franchised outlets, except for the information included in Item 19 [p.60]. If you receive any other financial performance information or projections, you should report it to the specified contacts [p.60].
What am I restricted to selling, and where must I buy supplies?
You are restricted to offering all food and beverage products identified in Exhibit A of the FDD, which the franchisor may modify from time to time. You must ensure that these items adhere to specific standards for ingredients, preparation, packaging, and health and sanitation as detailed in the Manuals [p.268]. Additionally, you may have to buy or lease certain items from the franchisor or a limited group of suppliers designated by them, which might be more expensive than other options [p.3].