Risk Score
Pending analysis
Investment Range
$1,471,500 - $1,793,500
Franchise Fee
$30,000
Total US Locations
11
Business Summary
Dos Coyotes Restaurants operate a fast-casual dining concept specializing in fresh-Southwestern cuisine. The restaurants offer a unique menu featuring items like burritos, ensaladas, tacos, and seasonal specials, emphasizing fresh ingredients, large portions, and competitive prices. Each Dos Coyotes location provides a clean, brightly colored atmosphere with efficient service, often serving beer, wine, and margaritas, and also offers full and drop-off catering services.
Corporate History
The Dos Coyotes restaurant concept began in 1991 with the opening of its first Fresh-Southwestern, fast-casual restaurant in Davis, California. Dos Coyotes Development Company LLC was formed in December 2012 as a Nevada limited liability company specifically to franchise and administer businesses using the Dos Coyotes brand. The company began offering franchises for its restaurants in January 2013. While the franchisor entity itself does not operate any restaurants, its commonly owned affiliates operate nine Dos Coyotes locations.
Financial Overview
Investment Range
$1,471,500 - $1,793,500
Franchise Fee (Low)
$30,000
Franchise Fee (High)
$40,000
Royalty %
2%
Marketing %
2%
Equipment Costs (Low)
$1,165,000
Equipment Costs (High)
$1,351,500
Working Capital
$60,750
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Dos Coyotes Development Company has audited financial statements that received an unqualified opinion, meaning they fairly present the company's financial position. However, a specific risk highlighted is that the estimated initial investment for a franchisee ($1,471,500 to $1,793,500) significantly exceeds the franchisor's stockholders' equity of $159,553 as of December 31, 2023. While large litigation settlements ($675,000 and $200,000) for wage and discrimination claims against related entities have been assumed by those parties, the franchisor faces a potential loss of royalty revenue from a franchisee location at Thunder Valley Casino, which has verbally indicated intent to close in late 2024. This location generated approximately $69,000 in royalty revenue in 2023.
Financing Details
Dos Coyotes Development Company does not offer any direct or indirect financing options to its franchisees. This means franchisees will need to secure their own funding from third-party lenders, and Dos Coyotes Development Company will not guarantee any loans, leases, or other financial obligations.
Performance Metrics
Total US Locations
11
Franchised Units
2
Corporate Units
9
Avg Square Footage
3,100
Franchising Since
2013
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
3
Litigation Summary
Dos Coyotes Development Company has been involved in three disclosed legal cases. Two recent cases, filed in 2020 and 2021, involved wage and hour violations (a class action settlement for $675,000) and wrongful termination/age discrimination (a settlement for $200,000, paid by a franchisee). Both recent cases were settled in April 2023 and are awaiting final court approval for dismissal in 2024. An older case from 2017, alleging breach of contract and franchise law violations by area developers, was settled and dismissed in 2018.
Bankruptcy History
Dos Coyotes Development Company has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their Dos Coyotes franchise, franchisees must provide written notice between 6 and 12 months before the current term ends. They must have maintained good standing by not defaulting on any material agreement provisions in the last 12 months, and have complied with all material terms throughout the initial term. All monetary obligations to Dos Coyotes Development Company, its affiliates, and approved suppliers must be satisfied. Additionally, franchisees are required to complete any new training, make requested changes to operating personnel, modernize the restaurant and equipment to current standards, pay a renewal fee equal to 50% of the then-current Initial Franchise Fee, and sign Dos Coyotes Development Company's then-current Franchise Agreement and a general release of claims.
Training & Support Program
Franchisor Assistance
Dos Coyotes Development Company provides a range of support to its franchisees. Before opening, Dos Coyotes Development Company loans a confidential operations manual, conducts comprehensive training for designated operators and managers, assists with site selection, and sells prototype building plans. It also approves restaurant designs and assists in planning an initial marketing program and the restaurant's grand opening. After the restaurant opens, Dos Coyotes Development Company continues to advise and assist with operations, including periodic visits from its representatives for the first month and as needed thereafter. It offers additional training programs, develops and administers advertising and promotion programs, provides advertising materials, and maintains an online presence for franchisees on its website.
Initial Training Hours
384
Training Location
Company-operated restaurants, primarily in the Sacramento, CA area
Ongoing Support
After a Dos Coyotes restaurant opens, Dos Coyotes Development Company provides ongoing operational advice and assistance through periodic visits by its representatives, especially during the first month. Franchisees have access to the confidential operations manual, which is updated over time, and can participate in additional training programs for new products or procedures, typically held once a year in the Sacramento, California area for a reasonable fee. Dos Coyotes Development Company also develops and administers advertising and promotion programs, provides marketing materials, includes restaurant information on its website, and may establish and administer Marketing Funds in the future. Franchisees are required to spend 2% of gross sales on local advertising and use a designated point-of-sale and computer system, for which they are responsible for maintenance and upgrades.
Franchise Requirements
Ideal Candidate Profile
Dos Coyotes Development Company is primarily looking for multi-unit developers who commit to opening at least 3, and preferably 5 or more, Dos Coyotes restaurants within a defined territory. Ideal candidates must be approved operationally and financially. Each restaurant requires a Designated Operator who is an experienced food professional with multi-unit restaurant supervisory experience (for Area Developers) or a certified general manager (for single units), dedicated full-time to day-to-day operations and approved and trained by Dos Coyotes Development Company. Owners providing oversight must also be approved as full-time representatives if the franchisee is a legal entity. All owners must personally guarantee the franchise agreement and must not have any competing business interests.
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Hands-On
Territory Type
Protected
Staff Count
33
Territory Size Requirements
Dos Coyotes Development Company defines territory size based on whether the restaurant is in a "high density area." If not in a high-density area, the protected territory is a 5-mile radius from the restaurant's front door. For restaurants located in a high-density area, the protected area is typically defined to include 100,000 or more residents and/or workers. In rare cases with unique circumstances like natural barriers, there might be no protected area.
Staffing Notes
Each Dos Coyotes Restaurant typically employs between 25 to 40 full and part-time staff members, including well-trained managers, front-of-house employees, cooks, and certified kitchen managers. Dos Coyotes Development Company requires that a properly certified manager be on duty at all times when the restaurant is open to the public. Franchisees are fully responsible for all hiring, training, and employment-related decisions for their staff.