Rusty Taco
Rusty Taco offers Mexican and Texas-inspired cuisine in a neighborhood setting, with a focus on fresh ingredients. Known for its restaurant concept, it requires an initial investment of $30,000 to $1,127,950. Operates in the quick-service restaurant industry.
About Rusty Taco
Rusty Taco is an American-based chain of fast food restaurants originating in Dallas, Texas in 2010, by founders Rusty Fenton and his wife, Denise Fenton. Rusty Taco is a subsidiary of Gala Capital Partners. As of 2022, there are 37 restaurants in nine states.
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Rusty Taco franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment required to open a Rusty Taco restaurant ranges from $30,000 to $75,000 and must be paid to the franchisor or its affiliates [p.1]. This amount includes the development right fee but does not cover the additional costs for opening a new location as detailed in the preceding table titled 'Your Estimated Initial Investment - Franchise Agreement' [p.18].
What is the initial franchise fee?
This isn't specified in the excerpts.
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 5% of the Gross Sales for each Accounting Period [p.102]. Advertising fees amount to up to 3% of franchisee gross sales per year [p.62].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement term is not explicitly stated in the excerpts, but you may renew it for one continuous 10-year term if certain conditions are met, as outlined on [p.100]. This includes being current with payments, complying with standards, and meeting other specified criteria.
Can I sell or transfer my franchise, and what does that require?
The franchise agreement permits the franchisor to refuse a transfer of ownership of the franchise except for good cause. Good cause includes but is not limited to unspecified reasons [p.5]. This means you cannot freely sell or transfer your franchise without the franchisor's approval [p.5(g)].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on good cause, which includes failure to comply with lawful provisions of the Franchise Agreement and not curing such failures after receiving written notice and a reasonable opportunity to cure, which cannot exceed 30 days [p.5]. Additionally, termination is permitted on any grounds available by law [p.169].
What financial requirements — net worth and liquid capital — do I need to qualify?
To qualify, you must meet the franchisor's then-current liquidity and net worth requirements. These standards are subject to change and will be evaluated based on your demonstrated ability to operate the restaurant and meet other specified criteria [p.121]. The franchisor may also require escrow of initial investment funds if their most recent financial statements show a net worth of less than $100,000 [p.6].
Do I get an exclusive or protected territory?
You do not receive an exclusive territory. However, you are granted a Protected Territory which generally covers a two-mile radius around your restaurant's front entrance, though this can be smaller in densely populated urban areas. This protection does not prevent competition from other franchisees, company-owned outlets, or other channels of distribution controlled by the franchisor [p.29, p.30].
What training and ongoing support does the franchisor provide?
The franchisor provides an initial training program that lasts approximately 28 to 35 days, covering various aspects of operating a Rusty Taco restaurant. This includes classes conducted at company-owned locations in Dallas, Texas, or other designated sites. Additionally, Shane Brewer, Senior Director of Operations, directs the training program for new openings and provides ongoing support. The franchisor may also offer additional mandatory, optional, refresher, advanced, or other training programs addressing common problems, new products, services, or techniques, though franchisees are responsible for travel, lodging, living expenses, and compensation during these events [p.26, p.28]. Remedial training is provided if a restaurant is not complying with standards due to inadequate training of personnel [p.105].
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 does not make any financial performance representations about a franchisee's future financial performance or the past financial performance of franchised outlets. However, if an existing outlet is being purchased, the franchisor may provide actual records of that outlet. Any other financial performance information received should be reported to the franchisor’s General Counsel and relevant regulatory agencies as specified [p.44]. This isn't specified in the excerpts for new franchises.
What am I restricted to selling, and where must I buy supplies?
You are not specifically restricted to selling only certain items; however, approximately 90% to 95% of your initial investment and ongoing expenditures will be directed towards products and services that are restricted by the franchisor [p.20]. You may have to buy or lease items from the franchisor or a limited group of suppliers they designate, which could potentially be more expensive than other options [p.3]. There is no mention of specific restrictions on what you can sell beyond operating a similar business during the term of the franchise [p.3], and purchasing arrangements are negotiated with primary suppliers; there are currently no purchasing or distribution cooperatives in the Rusty Taco franchise system [p.20].