Taco Bell Traditional Franchise

Financing Details

Taco Bell Franchisor, LLC does not directly offer financing for the initial investment or ongoing operations. However, its ultimate corporate parent, YUM! Brands, Inc., has an arrangement with a third-party lender, LS BDC Adviser, LLC (an affiliate of Lafayette Square Holding Company, LLC), to provide financing to qualified franchisee applicants. This program aims to support individuals, including those in low-to-moderate income and underserved communities. YUM may, but is not obligated to, provide credit support in the form of limited guarantees for these loans, covering up to 33% of the original principal or commitment amount, with a maximum guarantee of $5,000,000. Franchisees accepting this financing must agree to the lender's terms, including loan amount, interest rate, charges, and repayment. If YUM provides a guarantee, franchisees must notify YUM if the loan is over 30 days past due. In case of default, YUM has the option to buy out the loan and would then be reimbursed by the franchisee for all payments and costs incurred. The franchisor also reserves the right to terminate the Franchise Agreement and Market Build Out Agreement in the event of a loan or letter agreement default.

Litigation Summary

Taco Bell Franchisor, LLC disclosed one litigation case. A plaintiff, Alfarah Restaurant Group of IN, Inc., a Taco Bell licensee in Indiana, filed a complaint against Taco Bell Franchisor, LLC and Flynn Restaurant Group, LP. The lawsuit alleged a violation of the Indiana Franchise Deceptive Practices Act, claiming that the franchisor violated the statute by allowing a new cantina In-Line Unit to open too close to the plaintiff's existing unit. The plaintiff sought injunctive relief and monetary damages. The FDD states that the complaint was filed on November 30, 2024, but also notes that the matter has been resolved. No conclusions of law or fact were issued by the court in this resolved matter. No other litigation is required to be disclosed by Taco Bell Franchisor, LLC.

Renewal Conditions

To renew their franchise agreement, Taco Bell franchisees must be operationally and financially approved according to Taco Bell's current guidelines. This includes completing any required upgrades or relocation of their Unit and paying a successor fee. Franchisees are also required to sign a general release and may need to sign a new franchise agreement with materially different terms and conditions. For KT Units, additional conditions include meeting specified minimum annual sales requirements and fulfilling KFC's current standard requirements for obtaining a successor franchise agreement. Temporary extensions of the term may be granted by Taco Bell in its sole discretion to allow additional time for unit upgrades or relocations, subject to an extension fee.

Staffing Notes

Taco Bell requires that at least one manager per unit obtain Food Safety Certification training, which needs to be re-certified every three years. All restaurant employees are required to be certified in their specific job roles by successfully completing online learning courses and on-the-job training through OneSource, and must recertify during each marketing experience. Taco Bell emphasizes that franchisees are the sole employers of their staff and retain exclusive authority over all employment matters, including hiring, compensation, scheduling, discipline, and determining staffing levels, subject to minimum staffing guidelines for food safety and product quality standards. Franchisees are also responsible for training their employees using Taco Bell's materials to ensure a consistent brand experience.