Bottom line
- Total investment $429K – $1.0M including a $30K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $869K/year (median $873K).
- Rated MODERATE with a risk score of 67/100. SBA loan default rate of 0.0% across 17 loans (below the industry average).
- 20 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Baja Fresh unit return on the cash you put in?
Unlevered ROIC · per unit
16%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Baja Fresh units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.2M
on $6.1M purchase
Total debt
$4.9M
SBA $3.0M + senior + seller note
Overview
About
Franchisees operate fast-casual Mexican restaurants serving burritos, tacos, quesadillas, and fresh-mex bowls. Daily operations include food prep, kitchen management, customer service, inventory control, and P&L management across a single or multi-unit location with typical QSR staffing (5-15 employees). Franchisees are responsible for local marketing, hiring, and achieving brand standards while paying 5% royalties on all gross sales.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 5 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Baja Fresh represents a high-risk investment with a shrinking franchise system, hidden profitability metrics, corporate litigation patterns, and no franchisee protections—characteristics typical of declining brands in trouble.
Score breakdown · what drove the 67 / 100 rating
- 01MINORDeclining unit count (73 units with unknown/likely negative growth trajectory) suggests system contraction and franchisee struggles
- 02HIGHExtensive litigation history across parent company's portfolio (Kahala Franchising) involving breach of contract, financial misrepresentation, and state actions indicates systemic corporate governance issues
- 03MINORNo Item 19 (average net income) disclosure despite $868,755 average revenue is a major red flag—franchisor hiding profitability data suggests franchisees are underperforming or unprofitable
- 04HIGHGoing Concern status is False, indicating potential financial instability at corporate level that could affect franchisee support
- 05MEDNo territory protection combined with 73-unit system in decline creates cannibalization risk and no defensible market position
- 06MINORHigh investment-to-revenue ratio: $428k-$1M investment against $868k average revenue means ROI breakeven could take 1-2+ years with no margin for error
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
5 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Baja Fresh · FDD (2025) PDF