Risk Score
Pending analysis
Investment Range
$752,500 - $1,537,500
Franchise Fee
$25,000
Min Cash Required
$25,000
Total US Locations
76
Business Summary
Pancheros Restaurants specialize in serving burritos, quesadillas, tacos, burrito bowls, salads, rice, salsa, and other food and beverage items. These restaurants operate using a distinctive business system that includes unique interior and exterior designs, specific recipes, and operational procedures for preparing and serving freshly made food.
Corporate History
Panchero's Franchise Corporation was formed in Illinois in 1994 and began franchising Pancheros Restaurants in January 1995. An affiliate, Little Donkeys, Inc. (LDI), had already been operating restaurants similar to Pancheros since 1992. In 2021, LDI transferred the intellectual property rights for the PANCHEROS Marks to another new affiliate, LDIP Inc., while LDI continues to operate its own Pancheros restaurants.
Financial Overview
Investment Range
$752,500 - $1,537,500
Franchise Fee (Low)
$25,000
Franchise Fee (High)
$30,000
Minimum Cash Required
$25,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$638,500
Equipment Costs (High)
$1,166,000
Working Capital
$87,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Panchero's Franchise Corporation appears to be in good financial health, as indicated by its unqualified audit opinion for the financial statements as of December 31, 2024 and 2023. The independent auditors concluded that there are no conditions or events that raise substantial doubt about the company's ability to continue as a going concern. The company reported positive working capital, with current assets of over $1.5 million and current liabilities of just over $1 million as of December 31, 2024, and generated over $445,000 in cash from operating activities in 2024.
Financing Details
Panchero's Franchise Corporation does not offer any direct or indirect financing options to its franchisees, nor does it guarantee any notes, leases, or other financial obligations for them. Franchisees are responsible for securing their own financing.
Performance Metrics
Total US Locations
76
Franchised Units
50
Corporate Units
26
Avg Square Footage
2,250
Franchising Since
1995
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
Panchero's Franchise Corporation has disclosed two litigation cases. One current lawsuit, filed in May 2024, was initiated by Panchero's Franchise Corporation against a franchisee for enforcing post-termination obligations. The other case, concluded in 2015, involved an arbitration proceeding where a former development agent alleged wrongful termination and other violations. The arbitrator initially awarded the plaintiffs over $344,000, but Panchero's Franchise Corporation settled the case for $375,000, leading to the arbitration award being vacated and mutual releases exchanged.
Bankruptcy History
Panchero's Franchise Corporation has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
Panchero's franchisees can renew their franchise rights for two additional five-year terms if they provide written notice between 9 and 15 months before the current agreement ends. To be eligible, franchisees must be in good standing, meaning they have no outstanding defaults and have met all their financial obligations to Panchero's, its affiliates, and suppliers. They are also required to renovate and refurbish their restaurant to align with Panchero's current branding and standards, which includes updating furniture, fixtures, equipment, signage, and software. Franchisees must also meet Panchero's current qualifications for new franchisees, complete any updated training, and sign a general release along with Panchero's then-current franchise agreement, which could contain materially different terms and higher fees.
Training & Support Program
Franchisor Assistance
Panchero's Franchise Corporation provides comprehensive assistance both before and during the operation of a franchised restaurant. Before opening, Panchero's helps with lease approval, offers a two-day orientation, and provides three weeks of on-the-job training for first-time franchisees. It also furnishes approved lists for suppliers and supplies. After the restaurant opens, Panchero's provides about 10 days of on-site opening support for first-time franchisees, loans a confidential operations manual, and reviews all advertising materials. Panchero's also manages an advertising fund, updates approved supplier lists, and may modify the system, including menu items, equipment, and recipes. Franchisees receive ongoing consultation, advice on pricing, and specifications for the required point-of-sale system.
Initial Training Hours
136
Training Location
Corporate headquarters in Coralville, IA and a Franchisor's Selected Training Restaurant
Ongoing Support
Panchero's Franchise Corporation provides franchisees with ongoing consultation and advice on various aspects of business operations, including new product development, management, advertising, marketing, and financial guidance. This support is delivered through restaurant visits, meetings, seminars, conferences, and written materials. Franchisees are loaned a confidential operations manual, and Panchero's reviews their advertising materials and administers an advertising fund. The company also updates approved supplier lists and may introduce modifications to the System, including new menu items, equipment, and operating procedures. Franchisees may be required to attend continuing education and refresher training programs, usually not more than once a year for up to four business days, and mandatory annual special meetings or national conferences. Panchero's also specifies the point-of-sale system and back-office software franchisees must use, and retains full access to all related data.
Franchise Requirements
Ideal Candidate Profile
Panchero's Franchise Corporation seeks franchisees who meet its current educational, managerial, and business standards, possess good moral character and business reputation, have a strong credit rating, and demonstrate the aptitude and ability to operate a Pancheros Restaurant. Ideal candidates should also have sufficient equity capital. The franchisor requires that either the individual franchisee, a managing owner, a general partner, or a full-time manager dedicates full-time effort to managing and operating the restaurant. Any individual with access to confidential information must sign a confidentiality agreement, and all owners and managers of a franchisee entity must provide personal guarantees.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Supervisory
Territory Type
Protected
Territory Size Requirements
Panchero's Franchise Corporation defines its designated territories using geographical boundaries like zip codes, county lines, highways, or natural landforms. There are no fixed minimum criteria for the size of a single-unit designated area, as its configuration depends on factors such as population density and the character of the surrounding area. For area development agreements, the designated territory is also defined by geographical boundaries and its size is based on the number of restaurants the franchisee commits to develop, local demographics, and site availability.
Staffing Notes
Panchero's Franchise Corporation requires that each franchised restaurant be under the direct, on-premises supervision of either the franchisee, a managing owner, or a certified full-time manager. Even if a full-time manager is employed, the franchisee remains responsible for supervising operations. A manager or shift leader must always be on duty when the restaurant is open. Franchisees are responsible for maintaining a competent, trained staff in sufficient numbers to serve customers effectively, ensuring employees follow a prescribed dress code and handle customer complaints according to Panchero's policies. Panchero's explicitly states that franchisees are exclusively responsible for all aspects of employee management, including hiring, setting wages and benefits, determining work hours, and handling discipline and discharge. The Confidential Operations Manual provides further guidance on job descriptions, an employee handbook example, time reporting, and orientation and training for personnel.