Taco John's Franchise Cost, Revenue & Review 2026
- Investment
- $811K – $2.0M
- Disclosed sales
- $1.3M
- gross sales, not profit
- SBA charge-off
- 21.5%
- on 74 loans
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Taco John's is a quick-service franchise serving West-Mex-style tacos, burritos, and its signature Potato Oles. Franchisees run restaurants with drive-thru and dine-in service, managing food prep, staffing, and costs.
FranchiseVerdict summary · 2026
A Taco John's franchise requires a total initial investment of $811K – $2.0M, including a $25K franchise fee and an ongoing 5.0% royalty[2]. Per the 2026 FDD, average unit revenue was $1.3M[2]. SBA 7(a) loans show a 21.5% charge-off rate across 74 loans[1]. FranchiseVerdict grade: D (Below average), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: low - issued within the last 12 months
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored7 of 8 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
- Investment
- $811K – $2.0M
- 89th pct Service Resta…
- Avg gross sales
- $1.3M
- Outlet subset24th pct Service Resta…
- Royalty
- 5.0%
- 12th pct Service Resta…
- Units
- 327
- 86th pct Service Resta…
- SBA charge-off
- 21.5%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Quick-Service Restaurants median · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $811K – $2.0M including a $25K franchise fee, 5.0% ongoing royalty.
- RETURNSAverage unit revenue of $1.3M/year (median $1.2M) (reported for a subset of outlets rather than the whole system).
- RISKVerdict D (Below average), verdict score 35/100 (higher is better). SBA loan charge-off rate of 21.5% across 74 loans (well above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHNegative: net -17 franchised outlets in the latest year (2 opened, 19 closed); 5 signed but not yet open (Item 20).
- FLAGItem 4 discloses a bankruptcy of an officer or of a company an officer ran, not of the franchisor. Review Item 4 for details.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- Taco John's International, Inc.
- Predecessor
- Woodson-Holmes Enterprises, Inc.
- Prior franchisor entity
- CEO title
- President, Chief Executive Officer, and Director
- Heather Leed Neary
- Incorporated in
- Wyoming
- HQ
- 1650 West End Blvd., Suite 200, St. Louis Park, MN 55416
- Auditor
- McGee, Hearne & Paiz, LLP (MHP)
- Audited financials
- Franchisor revenue
- $34.8M
- vs $38.2M prior year
Overview
About
- CEO
- Heather Leed Neary
- Headquarters
- Minnesota
- FDD year
- 2026
- States available
- 23
Can you afford it, and what does the money buy?
Entry cost runs 193% above the typical quick-service restaurants franchise.
Source: FDD 2026 · Items 5–7
Full Item 7 breakdown16 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Initial Franchise Fee | $40K | $40K | |
| Ground Lease | $17K | $49K | |
| Design Costs | $14K | $56K | |
| Site Preparation and Completion Costs | $42K | $479K | |
| Construction Costs | $332K | $645K | |
| Operating Equipment | $132K | $361K | |
| Furniture, Fixtures and Decor | $35K | $55K | |
| Signage and Installation | $30K | $52K | |
| Point of Sale/Computer System | $20K | $46K | |
| Digital Menu Boards | $21K | $37K | |
| Initial Inventory | $15K | $22K | |
| Grand Opening Marketing | $25K | $35K | |
| Pre-Opening Training (Travel and Living Expenses) | $35K | $48K | |
| Insurance | $8K | $10K | |
| Miscellaneous Opening Costs | $20K | $60K | |
| Additional Funds - 3 Months | $25K | $40K | |
| Total initial investment | $811K | $2.0M |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. Total is the sum of line-item lows / highs — actual costs may fall outside this range depending on market and build-out scope.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $811K – $2.0M
- Bottom third — review vs category
- Liquid capital req'd
- $25K – $40K
- Middle of category vs category
- Franchise fee
- $25K – $25K
- Top 40% of category vs category
- Royalty
- 5.0%
- typical 6–8%
- Ad fund
- 4.0%
- typical 3–5%
- Total fee load
- 9.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 5.0% of net sales |
| Marketing / ad fund | 4.0% of net sales |
| Transfer fee | $4K |
| Renewal fee | $6K |
| Inventory (initial) | $15K – $22K |
| Total fee load | 9.0% of rev |
What do units actually make?
Average unit sales run 29% above the quick-service restaurants norm.
Reported for a subset of outlets rather than the whole system
Source: FDD 2026 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for Taco John's until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$1.5M
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own lease quote, labor market and build-out budget.
Returns model · single-unit ROIC
What would one Taco John's unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2026 FDD
Financial Performance
Reported for a subset of outlets rather than the whole system
- Avg gross sales
- $1.3M
- Per unit, per year
- Median gross sales
- $1.2M
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- historical average sales by restaurant segment (freestanding, endcap, c-store/travel plaza) with quartile breakdowns
- Sample size
- 248 outlets
- vs category median 19 · large
- Range (low → high)
- $456K→$2.8MCited, not corroborated — printed on page 70 of the 2026 FDD. Nothing else in our record independently restates or re-derives it.
- Cohort dispersion (min → max)
- Quartile band
- $775K→$1.9M
- Bottom 25% → top 25%
- Reporting year
- 2023
- Fiscal year the figures cover
- Source filing
- FDD 2026
- Disclosed in the 2026 filing, covering 2023
- Transparency
- 4 / 10
- vs category median 4 / 10 · typical
Compared against 781 Quick-Service Restaurants brands
Revenue is only 0.9x the investment. This means each unit may take 5+ years to recoup the initial outlay at typical margins.
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $1.3M/year in gross sales. Revenue-to-investment ratio: 0.9x. Reported for a subset of outlets rather than the whole system.
Fee burden
Total ongoing fee load of 9.0% — above the Quick-Service Restaurants median of 7.5%.
Disclosure
Transparency score 4/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System contracting at -11.5% CAGR over 3 years. Investigate whether closures are franchisor-driven consolidation or franchisee exits.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Quick-Service Restaurants medians
How Taco John's Compares
Category median of published Quick-Service Restaurants brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Is the system healthy?
Source: FDD 2026 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 327
- Opened
- 2
- Last reporting year
- Closed
- 19
- Terminated
- 3
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 5.8%
- Company-owned
- 11
- Corporate units in the system
- % franchised
- 97%
- vs corporate-owned
- Net growth (3-yr)
- -11.5%
- Net unit change over 3 years
- 3-yr CAGR
- -11.5%
- Compounded over last 3 years
Last fiscal year · Item 20 exits and transfers
- Terminated
- 3
- Not renewed
- 0
- Transferred
- 8
- Reacquired
- 4
- Franchisor bought back
- Signed, not yet open
- 5
- 0.02 per open outlet · Item 20 Table 5
- Projected new
- 7
- Franchisor's next-year forecast
- Transfer rate
- 2.3%
- Owners selling to other franchisees
- Continuity rate
- 92.8%
- Units that stayed open
- Termination rate
- 1.5%
- Franchisor-initiated terminations
- Ceased ops
- 6.1%
- Units that stopped operating
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 10 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 contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
Available to sell in · Item 12
- California
- Hawaii
- Illinois
- Indiana
- Maryland
- Michigan
- New York
- Rhode Island
- South Dakota
- Washington
States where the franchisor is registered to sell new franchises (FDD registration filings).
Where the owners are · Item 20 owner list
0 current owners across 0 states; 16 former (terminated, transferred or not renewed) listed separately.
Counts only, from the list the franchisor prints in Item 20. Names and phone numbers are for your own due diligence and are not shown here.
A system losing more than 10% of its units year-over-year is a red flag. Check whether closures are concentrated in specific regions.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 74
- Loan volume
- $26.5M
- Median loan
- $247K
- 50th percentile
- Charge-off rate
- 21.5%
- on 74 loans · rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 78.5%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 39
- Defaults
- 14
- Typical loan rate
- 7.3%
- avg rate to borrowers
- Franchised industry avg
- 21.5%
- brand above franchise avg ↑
- Jobs supported
- 947
- 3.6 per loan
- Lender concentration
- 15%
- top lender's share
Borrower mix: 18% went to startups / new businesses, 82% to established operators
Franchise vs independent — in limited-service restaurants, franchised businesses charge off at 21.5% vs 25.0% for independents — franchising is associated with 14% lower SBA default risk in this category.
Vintage analysis
Taco John's charge-off rate by loan vintage
Top lenders financing Taco John's franchisees
Showing 3 of 39 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for Taco John's from SBA 7(a) FOIA data.
- Principal loss rate
- 11.2%
- Avg SBA guarantee
- 76%
- Avg interest rate
- 7.28%
- Avg chargeoff amount
- $212K
- Lender concentration
- 14.9%
- Job velocity
- 3.6 per $100K
- NAICS benchmark
- 15.7%
- NAICS 722211
- Jobs supported
- 947
Top SBA lendersTop lender holds 15% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | Wells Fargo Bank National Association | 11 | $2.8M | 18.2% |
| 2 | First State Bank Nebraska | 6 | $1.7M | 0.0% |
| 3 | Old National Bank | 4 | $1.2M | 0.0% |
| 4 | BMO Bank National Association | 4 | $900K | 75.0% |
| 5 | First Central State Bank | 4 | $1.6M | 0.0% |
| 6 | Brookline Bank, a Division of Beacon Bank and Trust | 4 | $4.3M | N/A |
| 7 | U.S. Bank, National Association | 3 | $1.3M | 33.3% |
| 8 | First National Bank | 2 | $495K | 0.0% |
| 9 | First Interstate Bank | 2 | $140K | 0.0% |
| 10 | Glacier Bank | 2 | $540K | 0.0% |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| MNMinnesota | 17 | 2 | 12.5% |
| WIWisconsin | 10 | 6 | 75.0% |
| IAIowa | 8 | 1 | 12.5% |
| MTMontana | 7 | 0 | 0.0% |
| NENebraska | 7 | 1 | 14.3% |
| WYWyoming | 6 | 0 | 0.0% |
| KSKansas | 5 | 2 | 50.0% |
| SDSouth Dakota | 4 | 0 | 0.0% |
| ILIllinois | 2 | 1 | 50.0% |
| KYKentucky | 2 | 0 | 0.0% |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
A 21.5% charge-off rate means roughly 1 in 5 franchisees failed to repay their SBA loan. Investigate what changed.
What could kill this investment?
SBA loans charge off at 21.5% — 34% above the 16.0% national norm, i.e. higher lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Established 343-unit system, audited, no litigation. Bankruptcy disclosure is only an officer's prior unaffiliated employer (Christopher & Banks Chapter 11) - low weight. Net income was negative at -$1.09M and units declined 8.4%, though net worth remains healthy at $14.7M and Item 19 is disclosed (avg gross $1.23M).
Litigation (Item 3)
Subject: the franchisor is a named party (plaintiff).
One arbitration brought by franchisor against a franchisee/guarantor to collect royalty payments (Judicial Arbiter Group, Denver, CO, Dec. 2024).
Bankruptcy (Item 4)
Subject: an officer. An officer’s own bankruptcy or a company an officer ran, not the franchisor’s
CFO Richard Bundy was CFO of Christopher & Banks Corporation, which filed Chapter 11 in Jan 2021 (unaffiliated with Taco John's); no bankruptcy of franchisor itself.
Audited financials (Item 21)
Yes · McGee, Hearne & Paiz, LLP (MHP)
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
2025 total franchisor revenue disclosed in Item 8 as $34,788,783; includes Rebate Revenue ($1,050,729) plus administrative allowances ($198,023), collectively 3.6% of total revenue.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 35 / 100 verdict
- 01MINORNegative net income -$1.09M
- 02MEDUnit decline -8.4%
- 03HIGHBankruptcy is unaffiliated prior-employer of CFO (low weight)
- 04MEDStrong net worth $14.7M, Item 19 disclosed
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 9.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2026 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 20 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 3 |
| Territory type | Protected territory |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Online sales rights | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 5 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Curable defaultsℹ | 2 |
| Mandatory arbitration | Yes |
| Arbitration location | Minneapolis, Minnesota (American Arbitration Association) |
| Jury trial waiver | Yes |
| Governing law | Wyoming |
| Litigation count | 1 |
View Item 3 litigation summary
One arbitration brought by franchisor against a franchisee/guarantor to collect royalty payments (Judicial Arbiter Group, Denver, CO, Dec. 2024).
Items 10, 11
Training & Operations
- Classroom training
- 0 hrs
- On-the-job training
- 160 hrs
- Training location
- Company-owned restaurants in Cheyenne, Wyoming, or Minneapolis, Minnesota; online/Restaurant Support Center in St. Louis Park, Minnesota
- Ongoing training
- Required
- Time to open
- 12 mo
- From signing to launch
- Site selection
- Franchisee (with real estate broker accepted by franchisor); franchisor reviews and accepts site
- Franchisor financing
- Not offered
- Item 10
- POS system
- Approved Point of Sale System supplier (per Item 8/11)
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Approved Point of Sale System supplier (per Item 8/11)
Item 20 · call current owners
Franchisee Contacts
16 owners to call
Name · phone · city · state. Extracted from FDD Item 20
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Taco John's franchise?
The total investment to open a Taco John's franchise ranges from $811K – $2.0M, with an initial franchise fee of $25K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Taco John's franchise owners earn?
According to Item 19 of the Taco John's FDD, the average gross sales per unit is $1.3M. The median is $1.2M. Important context: Reported for a subset of outlets rather than the whole system. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
Who owns Taco John's?
Taco John's is franchised by Taco John's International, Inc.. Source: FDD Item 1, 2026 filing.
What is Item 19 in the Taco John's FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Taco John's FDD and qualifies whose outlets they describe.
What is Taco John's's franchise failure rate?
Based on SBA 7(a) loan data, Taco John's has a charge-off rate of 21.5% across 74 loans, meaning 21.5% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Taco John's franchise locations are there?
As of their most recent FDD filing, Taco John's has 327 total units in the United States, including 316 franchised units and 11 company-owned units. 2 new units were opened in the latest reporting year.
Is Taco John's a good franchise to buy?
FranchiseVerdict rates Taco John's as a D-grade franchise with a verdict score of 35 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
Are you the franchisor?
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.