How to Finance a TacoTime Franchise: Royalty, Fees and SBA Steps
By Anthony Cornella
A TacoTime franchise loan finances one of the oldest names in Mexican quick-service food, a brand that has been franchising since 1962. The franchisor’s startup cost page puts the estimated investment at $365,650 and up, with a $30,000 franchise fee, and its stated candidate requirements are a $250,000 net worth and $150,000 in liquid capital.
Those are moderate thresholds for a restaurant franchise, and they shape how a loan gets structured. This article covers the costs and ongoing fees, the brand’s SBA Franchise Directory listing, the routes to ownership and what a lender will want to see in your application.
US Professional Funding is not affiliated with, sponsored by or endorsed by TacoTime; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
TacoTime Franchise Loan at a Glance
- Initial franchise fee: $30,000 for the first traditional restaurant; fees for additional units may be discounted if certain criteria are met.
- Royalty: the greater of 6% of gross sales or $400 per week.
- Advertising: 4% of gross sales.
- Estimated investment: starting at $365,650, according to the franchisor, which attributes its cost estimate to the FDD.
- Net worth: $250,000.
- Liquid capital: $150,000.
- Experience: no prior restaurant experience required.
- Franchisor financing: none in-house; the franchisor works with third-party lenders.
- SBA Franchise Directory: listed as TacoTime (code S1709).
What Is TacoTime?
Ron Fraedrick, a Navy veteran and University of Oregon graduate, opened the first TacoTime as a walk-up restaurant next to the university in Eugene, Oregon, in 1960. He paid for it by mortgaging his family home and borrowing more money, an early example of the leverage that still drives restaurant ownership. Within a short time he had three local restaurants.
The first franchised TacoTime opened in Tacoma, Washington, in 1962. Over the next decade, 48 franchised restaurants opened across seven western states, and the company supported more than 150 locations by the end of the 1970s. A franchise in Lethbridge, Alberta, in 1978 took the brand into Canada, and by the end of the century the brand reported 225 domestic locations.
Today the franchisor is Kahala Franchising, L.L.C., based in Scottsdale, Arizona, which acquired the brand in 2003 and franchises it as part of a multi-brand portfolio. The brand positions itself around Mexican food made fresh in each restaurant, under the tagline “Made Fresh Since 1960.”
Restaurant format. The franchisor describes the traditional TacoTime restaurant as having a smaller footprint, and it cites a team of 8 to 12 employees as a typical operation. The franchisor’s current development focus includes Arizona, Colorado, Utah, Idaho and Nevada, plus other markets in the West and beyond.
How lenders see the brand. More than six decades of operating history give a lender a long record to evaluate, and a smaller footprint usually means a smaller loan. On the other hand, the brand’s growth history is concentrated in western states, so a lender will ask whether your market already knows the name.
TacoTime Franchise Costs
The franchisor’s startup cost page and its home page both put the low end of the estimated investment at $365,650, but they show different figures for the high end. Treat the current Item 7 table in the FDD as the only number to build a loan request around, and ask the franchise development team to confirm which version applies to you.
Initial franchise fee. The fee for a first traditional restaurant is $30,000. The franchisor says multi-unit fees may be discounted if certain criteria are met, so ask about this in writing if you plan to open more than one location.
Lease and build-out. Most smaller-footprint quick-service restaurants operate from leased space, often an end-cap or a pad building. The franchisor assists with site selection, lease negotiation and construction. Build-out costs depend on whether the space was previously a restaurant, with existing hood, grease trap and plumbing, or a raw shell that needs everything.
Equipment and signage. The kitchen needs cooking, prep and holding equipment, refrigeration and point-of-sale systems, plus interior menu boards and exterior signage. Where a drive-thru is available, ordering and communication equipment adds to the budget.
Opening inventory, training and working capital. Initial food and paper inventory, training travel, pre-opening wages for your crew and a cash reserve for the first months should all be in the plan.
Item 7 categories to review typically include:
- Initial franchise fee
- Lease deposits and rent paid before opening
- Leasehold improvements and construction
- Kitchen equipment, furniture and fixtures
- Point-of-sale and computer systems
- Signage and menu boards
- Opening inventory and supplies
- Training expenses
- Grand opening marketing
- Insurance, licenses, permits and professional fees
- Additional funds for the first months of operation
Total investment. Starting at $365,650, a TacoTime is an attainable project for many first-time owners, but the actual total depends on site condition, local construction costs and whether you use a drive-thru. Our article on how much franchise you can afford walks through matching the investment to your personal finances.
Ongoing Fees and How They Affect Your Loan
Royalty. TacoTime charges the greater of 6% of gross sales or $400 per week. The weekly minimum matters during the opening months: if sales start slowly, you still owe at least $400 each week, so build that floor into your early cash flow.
Advertising. The advertising contribution is 4% of gross sales.
Other fees. Technology, software, transfer, renewal and any remodel requirements are disclosed in Item 6 and the franchise agreement. Ask about expected refresh cycles, since an older location may need updates during your loan term.
How lenders treat these fees. Lenders measure debt service coverage after royalties and advertising are paid. Because the royalty and advertising contribution both come off gross sales, and the weekly minimum can raise the royalty in slow weeks, projections need realistic food and labor costs to show enough cash flow for loan payments.
Franchisor Requirements for New Owners
The franchisor lists these requirements on its franchise website:
- A net worth of $250,000.
- Liquid capital of $150,000.
- A minimum personal credit score, which the franchisor publishes on its site.
- No prior restaurant experience, but strong management skills, a commitment to quality and a willingness to follow the system.
The approval process. Candidates submit an information request, speak with the franchise development team, review the FDD and work through the franchisor’s next steps toward approval and site selection. Because the liquidity requirement is relatively modest, a lender will look closely at how much of that cash you plan to use for the down payment and how much will remain as a reserve.
Ways to Own a TacoTime
Open a new restaurant. A new unit is financed as a start-up: the lender reviews your business plan, the lease, the build-out budget and your personal financial strength. Our page on restaurant start-up financing explains how lenders approach new restaurants.
Buy an existing TacoTime. A long-established brand with a deep history in the West means existing restaurants do come up for sale. A resale comes with operating history, staff and an existing lease, all of which a lender can evaluate directly. The franchisor must approve the transfer. Read about buying a franchise resale and franchise restaurant acquisition loans.
Open multiple units. With discounted fees possible for additional units, a multi-unit plan can lower the fee per restaurant. Lenders finance each new unit as the prior ones prove themselves.
Financing Options for a TacoTime Franchise
SBA 7(a) loans. For a smaller-footprint restaurant, an SBA 7(a) loan can often cover the franchise fee, build-out, equipment and working capital in one package. TacoTime’s SBA Franchise Directory listing simplifies the lender’s eligibility review. Learn more about SBA 7(a) loans for business owners.
SBA 504 loans. If you buy a building or freestanding pad for your restaurant, the SBA 504 program is built for owner-occupied real estate and long-life equipment. Read about SBA 504 loans for real estate.
Conventional term loans. Owners with strong credit, collateral and liquidity, or existing operators adding a unit, may prefer conventional bank-style business loans.
Equipment financing. Fryers, griddles, steam wells, refrigeration, point-of-sale terminals and menu boards can be financed or leased separately, which preserves cash. See franchise equipment financing and leasing.
Working capital and lines of credit. The weekly royalty minimum, pre-opening payroll for a crew of 8 to 12 and initial inventory all draw cash before sales stabilize. A working capital line can bridge slower weeks. Explore working capital for restaurants.
Seller financing on resales. A seller may be willing to carry a note for part of the price. Lenders usually require it to be subordinate to the senior loan, and loan programs may limit how it is repaid.
SBA Loans for TacoTime Franchisees
SBA loans are made by participating lenders with a partial guarantee from the SBA. For franchises, the lender must confirm the franchise relationship meets SBA eligibility rules.
Directory listing. TacoTime appears on the SBA Franchise Directory under code S1709, and the listing carries no additional notes. In plain terms, the franchise agreement has already been found eligible, so the lender can rely on the listing instead of reviewing the agreement for eligibility from scratch. The listing does not mean the SBA endorses the brand, and your loan still requires full approval.
Loan size. The SBA 7(a) program maximum is currently $5 million, though program rules can change. A single TacoTime project will usually sit well below that cap, which leaves room for a multi-unit plan over time.
Application tips.
- Show where your equity injection comes from with bank and brokerage statements.
- Provide a signed or proposed lease and a build-out estimate tied to Item 7.
- Include a business plan with month-by-month projections for the first year.
- Have an attorney review the franchise agreement and any addenda before closing.
Our article on writing a franchise business plan for an SBA loan shows what lenders expect in the plan, and our SBA loan calculator helps you estimate payments.
How Lenders Evaluate a TacoTime Deal
Personal credit and financial history. The franchisor already screens for credit, and lenders review credit reports, payment history and any prior business debts for each owner.
Net worth and liquidity. Meeting the $250,000 net worth and $150,000 liquidity requirements gets you approved by the franchisor; lenders also want reserves left after the down payment.
Management experience. TacoTime does not require restaurant experience, but lenders value management or quick-service experience. If you are new to restaurants, plan to hire an experienced manager and show that in your plan.
Business plan and projections. Projections should include the greater-of royalty, the 4% advertising contribution, crew labor and local rent. If your market is new to the brand, explain how you will build awareness, and support sales assumptions with FDD information and franchisee conversations.
The FDD and franchise agreement. Lenders review Items 5, 6, 7, 17 and 20, and check whether Item 19 includes financial performance representations.
Site and lease. The lease should run at least as long as the loan, including options. Lenders look at visibility, parking, traffic and neighboring tenants.
Resale financials. For an existing restaurant, provide several years of tax returns, profit and loss statements and sales reports.
Equipment and Build-Out for a Smaller Footprint
A smaller footprint does not mean small equipment needs. A TacoTime kitchen prepares items fresh during the shift, so plan for:
- Fryers, griddles and steam wells for the hot line.
- Prep tables, slicers and food storage.
- Walk-in and reach-in refrigeration.
- Point-of-sale terminals and order displays.
- Menu boards, interior décor and exterior signage.
- Drive-thru ordering equipment, where the site has a lane.
Second-generation restaurant space with usable hoods and plumbing can reduce build-out costs, but confirm that existing equipment meets brand standards before you count on reusing it.
Multi-Unit Growth and Development Agreements
The franchisor says fees for additional units may be discounted if certain criteria are met, and it is targeting growth in several western states. A multi-unit owner should ask how development schedules work and what happens if a restaurant opens late.
Lenders approach growth in stages. After the first restaurant has a track record, the lender reviews its results, your remaining liquidity and your management bench before financing the next one. An experienced general manager who can run the first store while you open the second makes a stronger case.
Real-World Scenarios
A first-time owner. A career manager from another industry meets the net worth and liquidity requirements. An SBA 7(a) loan covers the fee, build-out and working capital, and the plan includes an experienced shift leader.
A second-generation site. A buyer finds a former restaurant space with a working hood. The build-out budget comes in lower, and the lender focuses on the lease and the projections.
A resale in an established market. A buyer acquires a long-running TacoTime from a retiring owner. The lender underwrites the store’s history, and the seller carries a small subordinate note.
An operator adding units. An owner with one established location adds a second, using a conventional loan backed by the first store’s cash flow and the discounted fee for additional units.
Common Mistakes to Avoid
- Relying on the low end of the investment range without pricing your actual site.
- Forgetting the $400 weekly royalty minimum when modeling the opening months.
- Using all liquid capital for the down payment and leaving no reserve.
- Signing a lease before the lender has reviewed it.
- Assuming brand awareness in a market where TacoTime is new.
For more pitfalls, read our article on restaurant loan mistakes to avoid.
Next Steps to Finance Your TacoTime Franchise
Step 1: Check your numbers. Compare your net worth, liquid capital and credit with the franchisor’s requirements.
Step 2: Request franchise information. Talk with the development team and receive the current FDD.
Step 3: Review the FDD. Study Items 5, 6, 7, 17, 19 and 20 with your attorney and accountant.
Step 4: Call franchisees. Ask about build-out costs, staffing and the opening ramp.
Step 5: Secure a site. Work with the franchisor on site selection and have your lender review the proposed lease.
Step 6: Prepare your loan package. Assemble your business plan, projections, personal financial statements and tax returns.
Step 7: Close and open. Coordinate loan closing with lease signing, construction and training.
TacoTime Franchise Loan FAQs
How much does a TacoTime franchise cost?
The franchisor’s pages put the estimated investment at $365,650 at the low end. They show different high-end figures, so confirm the full range in Item 7 of the current FDD.
What is the TacoTime franchise fee?
The fee for a first traditional restaurant is $30,000. Additional units may qualify for a discounted fee if certain criteria are met.
What royalty does TacoTime charge?
The royalty is the greater of 6% of gross sales or $400 per week, and the advertising contribution is 4% of gross sales.
How much liquid capital and net worth do I need?
The franchisor lists $150,000 in liquid capital and a $250,000 net worth.
Is TacoTime eligible for an SBA loan?
Yes. TacoTime is listed on the SBA Franchise Directory under code S1709. Approval still depends on the borrower, the project and lender review.
Can a TacoTime franchise loan include equipment?
Yes. An SBA 7(a) loan can include equipment, or you can finance kitchen equipment and signage separately through equipment loans or leases.
Can I buy an existing TacoTime restaurant?
Yes, subject to franchisor approval of the transfer. A resale gives lenders actual operating results to evaluate.
Do I need restaurant experience?
The franchisor does not require prior restaurant experience. Lenders still weigh management experience, so hiring an experienced manager can strengthen a TacoTime franchise loan application.
Does TacoTime offer financing?
The franchisor says it does not offer in-house financing and works with third-party lenders. Item 10 of the FDD discloses any financing arrangements.
Can I open more than one TacoTime?
Yes. The franchisor says fees for additional units may be discounted, and lenders typically finance each new restaurant once earlier units are established.
What training does TacoTime provide?
The franchisor provides hands-on training in an operating restaurant covering food preparation, inventory, point-of-sale and customer service, plus ongoing operations and marketing support.
Final Thoughts
TacoTime pairs a long franchising history with a smaller-footprint restaurant and moderate financial requirements. A TacoTime franchise loan works best when it is built on the current Item 7 figures, a reviewed lease and projections that account for the weekly royalty minimum and a healthy cash reserve.
US Professional Funding helps franchise owners and buyers finance new restaurants, acquisitions, equipment, working capital and refinancing for established brands. Learn more about our franchise financing and restaurant financing solutions.
