Top

TACO DEL MAR Franchise Co. Sold at Bankruptcy Auction

October 3, 2010

Bankrupt Taco Del Mar was sold at auction last week, and Connecticut-based Franchise Brands had the winning bid of $3.25 million.

The sale of the Mexican food chain operator and franchisor must still be approved by a bankruptcy judge.  Taco Del Mar has lost money for several years, and now has debt in excess of $3 million.

Taco del Mar is an example of an aggressively promoted franchise concept that grew fast and crashed hard.  The Seattle-based quickservice restaurant chain grew from 74 locations in 2003 to 270 locations in 2008.  More than 200 shops closed between 2005 and 2009.

According to a filing in U.S. Bankruptcy Court, Taco Del Mar owns roughly 22 corporate stores in the U.S., Canada and Guam.  According to a recent company press release, “Taco Del Mar can be found in more than 200 locations.”

According to its website, Franchise Brands was founded “To acquire an interest in a diverse portfolio of businesses and expand them
through franchising.”

According to FranchiseBrandsLLC.Com:

Based in Milford, CT, Franchise Brands, LLC was created in 2005 with the support and guidance of the founders of SUBWAY® restaurants. It was founded on a basic principle: to invest in small and mid-market companies with experienced management. Companies may currently be franchising or demonstrate the potential to do so.

ARE YOU FAMILIAR WITH THE TACO DEL MAR FRANCHISE?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Sources:  Seattle Times, FranchiseBrandsLLC.Com

Contact UnhappyFranchisee.com:  UnhappyFranchisee[at]gmail.com

TACO DEL MAR: Ex Franchise Owner Blasts Franchisor, Master Developer

April 16, 2010

Is the Taco Del Mar franchise a great opportunity to gain the support of a franchisor dedicated to franchise owner profitability… or is it an unmitigated disaster?

tACOdELmARlogo

It depends on whom you ask.

Taco Del Mar: “great franchise partnerships create great successes.”

The Taco Del Mar franchise website states:

“Taco Del Mar believes that great franchise partnerships create great successes. We have built our organization in order to develop positive and profitable relationships with our franchisees… We begin each day focused on franchise profitability… We developed our system to return the highest ROI to the franchisee in the shortest time… We believe in you.”

Taco Del Mar:  A franchise “disaster.”

Former Maryland Taco Del Mar franchise owner Suzanne Todd has a different opinion, calling her experience with the company a “disaster.”

According to a Wall Street Journal story, Todd claims she was recruited as a franchise owner by Master Developer and franchisee Thomas Murphy, who told her Taco Del Mar was the “next Subway.”  She claims Taco Del Mar executives “lured her to join the team by predicting future positive financial returns,” and “‘placed a great deal of pressure” on her to sign a franchise agreement before the prices increased.”

She signed in April 2007, paid a $20,000 franchise fee and opened her Frostburg, MD restaurant in December 2007.

Claims her Master Developer “doomed her… restaurant to failure.”

Todd claims her own Master Developer Murphy doomed her restaurant to failure by his alleged “ineptitude” and non-compliance with the system he was representing:

She blamed Murphy’s “ineptitude” as a master developer, deeming his flagship restaurant a failure that then doomed her own restaurant to failure. Why’s that? Well, Todd said Murphy’s branch had food that “was not up to standard” because it didn’t rely on the chain’s recipes. The branch used supplies from the wrong brands, handing out Cinnabon cups, Subway paper products, and – gasp – Wal-Mart-brand tortilla chips. And customers had even filed health safety complaints regarding food poisoning alleged to have resulted from eating there.

Franchisee Todd contends that the franchisor provided inadequate sources for food and supplies, and poor support especially in advertising.  The Maryland Attorney General’s office accused Taco Del Mar of violating Maryland law with regard to the offer and sale of the franchises.  The state and the franchisor struck a deal in February 2009 that gave Todd the option of rescinding her franchise agreement.  She jumped at the chance and her branch closed that same month.

Taco Del Mar bankruptcy halts arbitration proceeding.

Suzanne Todd initiated an arbitration proceeding against Taco Del Mar for $500,000.  The proceeding was halted, along with all other “creditor actions,” when Taco Del Mar Franchising Corp. sought Chapter 11 protection in January, 2010.

According to the WSJ article, Taco Del Mar blamed its bankruptcy on “ several years of financial losses it experienced on poor expense management, lawsuit expenses and its selection of ‘poor franchisees and poor sites’ for its new restaurants.”

Despite its troubled past, Taco Del Mar and its Master Developers continue to promote the Taco Del Mar franchise opportunity on its franchise website.

WHAT DO YOU THINK?  IS TACO DEL MAR A GREAT FRANCHISE OPPORTUNITY DESIGNED FOR FRANCHISEE PROFITABILITY?  OR IT A FRANCHISE “DISASTER”?

logo:  Taco Del Mar

Bottom