Mucho Burrito Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$470,000 - $925,000
Franchise Fee
$24,000
Min Cash Required
$5,000
Total US Locations
1
Business Summary
Mucho Burrito operates quick-service restaurants specializing in fast-casual Mexican food like burritos, quesadillas, tacos, nachos, and other assorted foods and drinks. These restaurants focus on freshly prepared items and are designed to serve the general public.
Corporate History
Mucho Burrito's ultimate corporate parent, MTY Food Group, Inc., was incorporated in Canada in 1979. MTY Franchising USA, Inc., the franchisor, was originally incorporated in Delaware in 2001 as The Extreme Pita Franchising USA, Inc., then converted to MTY Franchising USA, Inc., a Tennessee corporation, in 2019. MTY Franchising USA, Inc. acquired the right to franchise Mucho Burrito restaurants in the United States in January 2019 and began offering Mucho Burrito Unit Franchises in February 2019. Before this, Mucho Burrito Franchising USA, Inc. (MBUSA), a Delaware corporation incorporated in 2010, offered Mucho Burrito unit franchises beginning in February 2010 until it was acquired by MTY Canada (a direct parent) in September 2013.
Financial Overview
Investment Range
$470,000 - $925,000
Franchise Fee (Low)
$24,000
Franchise Fee (High)
$30,000
Minimum Cash Required
$5,000
Royalty %
6%
Marketing %
3%
Equipment Costs (Low)
$361,000
Equipment Costs (High)
$694,000
Working Capital
$50,000
Audited Financials
Yes
Offers Financing
Yes
Financing Details
Mucho Burrito does not offer direct or indirect financing arrangements for its franchisees, nor does it guarantee obligations under notes, except for potentially guaranteeing a franchisee's lease for their site, solely at the franchisor's discretion. If a franchisee purchases an existing corporate-owned restaurant from a Mucho Burrito affiliate, the franchisor may finance up to 100% of the purchase price. For such financing, the annual interest rate would range from 0% to 12%, depending on the franchisee's creditworthiness and down payment, with repayment periods between 12 and 60 months. This financing is secured by a first lien on all equipment, and the franchisee (and their spouse, if applicable) must personally guarantee the debt.
Performance Metrics
Total US Locations
1
Franchised Units
1
Corporate Units
0
Avg Square Footage
1,500
Franchising Since
2010
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
19
Litigation Summary
Mucho Burrito has a history of litigation involving its affiliates and predecessors. This includes numerous concluded arbitration and litigation cases. For instance, in 2016, a Washington lawsuit against The Extreme Pita Franchising USA, Inc. (a predecessor) for franchise law violations and misrepresentation settled for $20,000. Kahala Franchising, L.L.C. (an affiliate) resolved a 2015 California breach of contract case with a franchisee in 2017 by repurchasing the territory for $75,000 and forgiving $130,000 in damages. Another Kahala case in Texas in 2014, alleging Texas Business Opportunities Act violations, settled for $35,000 in 2015. SweetFrog Enterprises, L.L.C. (an affiliate) settled a 2014 arbitration for fraud and unfair practices for $300,000 in 2015, and in 2016, settled a breach of contract lawsuit against a franchisee. Fresh Enterprises, L.L.C. (an affiliate) settled a 2013 California breach of contract and misrepresentation case for $585,000 in 2015. Famous Dave's of America, Inc. (an affiliate) settled a 2016 arbitration alleging Minnesota Franchise Act violations in 2016 and a 2015 trademark infringement lawsuit against former franchisees in 2018. An affiliate, VI BrandCo, L.L.C., was involved in a 2015 bankruptcy proceeding where its CEO and others settled fraudulent transfer claims for $150,000 each in 2019. Wetzel's Pretzels, L.L.C. (an affiliate) settled a 2019 arbitration for rescission and misrepresentation for $125,000 in 2021. Papa Murphy's International, L.L.C. (an affiliate) faced two consolidated lawsuits filed in Washington in 2014 by franchisees alleging misrepresentations, which were dismissed in June 2020 through various settlements, including Papa Murphy's paying up to $4 million and purchasing some stores. Public agency actions include administrative cases in Maryland and Virginia against predecessors for registration and disclosure violations, which were concluded through consent orders and penalties. More recently, in the fiscal year ending November 30, 2024, Kahala Franchising, L.L.C. filed two new lawsuits against franchisees for breach of contract and forcible entry and detainer, indicating ongoing legal enforcement activities.
Bankruptcy History
Mucho Burrito has no bankruptcy information required to be disclosed in this item.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
Mucho Burrito franchisees seeking to renew their agreement must provide notice at least 120 days before the current term expires. They must be in good standing, meaning they are not in default of their agreement or any other agreements with Mucho Burrito or its affiliates, and have not received more than three default notices during the term, or more than two in the five years before renewal. Franchisees must have the right to maintain possession of their current location or secure a new suitable one. They are required to sign a general release and a new franchise agreement, which may have different terms, including higher royalty and advertising fees. Additionally, franchisees must agree to complete any required remodeling and improvements, including upgrading their point-of-sale system, within a timeframe specified by Mucho Burrito, and pay the Renewal Franchise Fee.
Training & Support Program
Franchisor Assistance
Mucho Burrito provides several forms of assistance to its franchisees. Before opening, the franchisor assists with site selection by approving locations that meet minimum requirements. Mucho Burrito provides design drawings for restaurant construction and specifies required furnishings, fixtures, and equipment. Franchisees receive a confidential operations manual with operating procedures. Mucho Burrito also offers a training program for up to two individuals, covering both in-store and new owner training, typically held online or at the Scottsdale, Arizona training center. After opening, Mucho Burrito creates a marketing plan for grand openings and initial advertising, incorporating franchisee input. The franchisor maintains an ongoing advisory relationship, offering consultation on marketing, merchandising, and general business operations. They provide updated operating standards and conduct periodic inspections and quality checks. Mucho Burrito may also offer software recommendations from approved third-party vendors for administrative tasks and approve substitute locations if a franchisee needs to relocate.
Initial Training Hours
140
Training Location
Online, in Canada, or at the Kahala Training & Education Center in Scottsdale, AZ, or at a designated restaurant location in the United States.
Ongoing Support
Mucho Burrito provides ongoing support to its franchisees after they open. This includes maintaining a continuous advisory relationship, offering consultations on marketing, merchandising, and general business operations to help improve and develop the business. Mucho Burrito also provides updated operating standards and conducts periodic inspections and quality service checks to ensure high and uniform standards across all restaurants. The franchisor may also recommend software from approved third-party vendors for administrative, accounting, and inventory control, and reviews and approves any proposed restaurant relocations.
Franchise Requirements
Ideal Candidate Profile
Mucho Burrito seeks franchisees who plan to actively participate in the direct operation and daily affairs of their restaurant, although personal participation is not strictly required. The franchisor prefers candidates who will devote their full-time efforts to the business, noting that active involvement can lead to higher sales and better operating costs. Franchisees must also employ a full-time, qualified on-premises manager for the business.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Territory Size Requirements
The Mucho Burrito franchise is granted for a specific, approved location within a geographic area identified in the Franchise Agreement. Mucho Burrito evaluates proposed locations based on factors such as occupancy costs, proximity to major retail activity and other Mucho Burrito restaurants, sign visibility, traffic volume, parking availability, neighborhood economic profile, population density, accessibility, competition, and other tenants in the retail structure. The FDD does not specify a fixed radius, population, or square mileage for defining the territory size itself.
Staffing Notes
Mucho Burrito franchisees are solely responsible for hiring, firing, training, supervising, and compensating their employees. They must ensure that all employees directly interacting with the public can speak and read English, and any other language required to meet local public needs. Franchisees must also ensure their manager(s) and employees maintain high standards of sanitation, cleanliness, and demeanor, and wear franchisor-approved uniforms. At least one full-time, qualified on-premises supervisor, or manager, must be employed by the franchisee for the business, and this manager must dedicate their entire time during normal business hours to the management and operation of the business.