What should I check before buying a taco or burrito franchise resale?

When you buy an existing taco or burrito unit, you are buying a business that belongs to a larger system. Much of what matters sits in the franchise agreement and in the brand’s own records, not only in the seller’s books. A good checklist therefore begins with the franchisor, then moves to the premises and the numbers.

Franchisor approval and training

Ask the franchisor what it requires of a buyer before it will approve the transfer, how long that takes and whether training must be finished before closing. Ask your lawyer whether closing should depend on that approval. Whether a franchise disclosure document applies to a resale is also a question for your lawyer.

Years left and what renewal needs

Read how long the franchise agreement still runs and what renewal asks for. A unit with little time left may need a new agreement on new terms soon after you buy. Ask what the brand says about renewal for a unit like this one, and ask for its answer in writing.

Remodel, equipment and the lease

Brands often update their look or equipment. Ask whether a remodel or refresh is due, who pays and by when. Then read the lease. Some leases run through the franchisor or carry a head lease, so check who the tenant is and what consent the landlord and the franchisor each need. BDC’s commercial lease guide, listed below, helps with the terms to understand.

Sales reports from the brand’s systems

• Point-of-sale reports by day, daypart and item, matched to bank deposits.
• Delivery-app statements, with the commission each app took.
• Royalty and marketing-fund statements the unit has paid.
• Any franchisor audit, inspection or default notice.