Risk Score
Pending analysis
Investment Range
$236,500 - $1,299,000
Franchise Fee
$5,000
Total US Locations
759
Business Summary
Qdoba operates quick-service or fast-casual Mexican restaurants. Qdoba offers customizable menu items like burritos, bowls, tacos, salads, quesadillas, and nachos, prepared with fresh, in-house ingredients. Many of Qdoba's menu items use a tiered, all-inclusive pricing structure, notably offering free queso and guacamole on "create-your-own" entrees. Qdoba restaurants are typically located in strip shopping centers and freestanding buildings, ranging from 1,500 to 3,000 square feet, and offer various ordering options including drive-thru, pickup, and digital channels. Qdoba also features a catering program.
Corporate History
Qdoba's history traces back to September 1995 with the operation of Mexican restaurants, then known as Zuma Fresh Mexican Grill and Z-TECA. The brand's predecessor, Qdoba Restaurant Corporation (QRC), was formed in 1998 and began offering franchises in 1997. Qdoba Franchisor LLC itself was formed in September 2023 and officially became the franchisor in November 2023 as part of a securitization transaction, taking over all U.S. franchise agreements and intellectual property from QRC.
Financial Overview
Investment Range
$236,500 - $1,299,000
Franchise Fee (Low)
$5,000
Franchise Fee (High)
$40,000
Royalty %
5%
Marketing %
2.75%
Equipment Costs (Low)
$166,000
Equipment Costs (High)
$991,000
Working Capital
$87,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The financial statements for Qdoba's indirect parent, Quidditch Acquisition, Inc., show consistent net losses from 2020 to 2024. The company has also recorded significant impairment charges for underperforming or sold company restaurants in fiscal years 2020, 2021, 2022, 2023, and 2024, indicating ongoing operational challenges in some locations. While the auditors have provided an unqualified opinion, these factors suggest financial pressures. Qdoba also completed a securitization transaction in November 2023, taking on significant debt.
Financing Details
Qdoba does not offer any direct or indirect financing options for new or existing franchisees. Qdoba will not guarantee leases or other financial obligations incurred by franchisees. While Qdoba takes a first-priority security interest in the business assets, it may agree to subordinate this interest to other institutional lenders to help franchisees obtain third-party financing.
Performance Metrics
Total US Locations
759
Franchised Units
595
Corporate Units
164
Avg Square Footage
2,250
Franchising Since
1997
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
Qdoba has disclosed two litigation cases. The first involved a franchisee, Q of Hasbrouck Heights, LLC, who sued Qdoba in 2017 alleging breach of contract and fraud related to a franchise agreement termination. Qdoba counterclaimed for breach of contract. This case was settled in October 2023, with Qdoba agreeing to pay $600,000, reducing royalties for the franchisee, and extending the franchise agreement. The second, more recent case was filed in November 2024 by former franchisees, Fiesta Ventures, against Qdoba and its predecessor. These franchisees allege breach of two franchise agreements and unfair business practices related to termination. While initial requests for restraining orders were denied, Qdoba has agreed to mediation for one restaurant's termination, and Qdoba plans to defend the remaining claims.
Bankruptcy History
Qdoba has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their Qdoba franchise agreement, franchisees must notify Qdoba in writing between 12 to 18 months before the initial term ends. They must be in good standing, meaning they haven't defaulted on their agreements or received more than three default notices. Franchisees are required to pay a $10,000 renewal fee, sign Qdoba's then-current franchise agreement (which may have different terms), provide proof of their right to possess the location for the new term, and complete a renovation or modernization of the restaurant to current brand standards within six months of signing the new agreement. Additionally, they must meet current qualification and training requirements and sign a general release of claims against Qdoba.
Training & Support Program
Franchisor Assistance
Qdoba provides extensive support to its franchisees. Before opening, Qdoba assists with site selection and approval, and provides design and construction guidance including prototype plans and review of construction documents. Qdoba offers initial certified training for the Designated Operator, General Manager, and another manager, along with technical setup and configuration support. Qdoba also provides lists of required equipment, signage, inventory, and confidential operating manuals. For the first two restaurants opened by a franchisee, Qdoba provides on-site pre-opening and opening assistance. On an ongoing basis, Qdoba offers advice and written materials on restaurant management, new equipment, and food product developments, conducts inspections and evaluations, and requires participation in refresher training, seminars, and an annual brand conference. Additionally, Qdoba continuously updates and provides access to its operating manuals, approved supplier lists, and pricing structures through the Qdoba Training System. Qdoba manages a Marketing Fund for national advertising, promotional programs, and brand-building activities, including digital and social media campaigns, customer loyalty programs, and point-of-purchase materials. Qdoba also specifies and requires the use of certain computer and point-of-sale systems, including Polling software for data transfer, and ensures compliance with data security standards.
Initial Training Hours
315
Training Location
Company-operated certified Qdoba training restaurant near its headquarters in San Diego, CA, or another selected location.
Ongoing Support
Qdoba provides ongoing support to franchisees through various channels. Qdoba offers advice and written materials on restaurant management, new equipment, and food product developments. Qdoba conducts inspections and evaluations of restaurants and their offerings. Franchisees are required to attend ongoing training, including refresher courses, seminars, and potentially an annual brand conference. Additionally, Qdoba continuously updates and provides access to its operating manuals, approved supplier lists, and pricing structures through the Qdoba Training System.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Min Years Experience
3
Operational Details
Location Type
Retail
Owner Participation
Full-Time
Territory Type
Protected
Territory Size Requirements
Qdoba's franchise territories are defined as a "Protected Territory" that typically extends in a two-mile radius around the individual Qdoba restaurant. However, Qdoba may agree to a smaller or larger radius. For those signing a Development Agreement, the "Development Area" size varies based on factors like population concentration. Developers must also provide a detailed market plan including residential and daytime population, total businesses, median household incomes, income and population growth for their proposed trade areas.
Staffing Notes
Qdoba requires franchisees to employ a Designated Operator (DO) to oversee all Qdoba restaurants they own. If the franchisee operates multiple locations, the DO must have at least three years of multi-unit restaurant experience and be approved by Qdoba. Each individual Qdoba restaurant must also have a full-time General Manager with at least one year of restaurant general manager experience, who dedicates all efforts to that single restaurant. Both the DO and General Manager are required to complete Qdoba's certified training program and attend ongoing refresher courses and conferences. Franchisees are responsible for hiring a competent and sufficient staff, ensuring good customer relations, and adhering to Qdoba's dress code. All employees are considered employees of the franchisee, not Qdoba.