Mucho Burrito
Initial Investment Range
$470,000 to $925,000
Franchise Fee
$34,000 to $52,500
As a franchisee, you will operate a restaurant called Mucho Burrito, which specializes in fast casual burritos, quesadillas, tacos, nachos, and other assorted foods and drinks.
Enjoy our complimentary free risk analysis below
Unlock the full risk analysis to access 9 more categories covering 100+ risks.
Mucho Burrito March 28, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor's audited financial statements in Exhibit V show a significant decline in profitability, with a net loss of $12.5 million in 2024 compared to a net income of $16.9 million in 2023. Revenue also decreased. This financial downturn could potentially affect the franchisor's ability to provide support, invest in the brand, and fulfill its obligations to you, representing a notable risk to your investment.
Potential Mitigations
- A thorough review of the franchisor's financial statements with your accountant is essential to assess its stability and ability to support the system.
- Ask your attorney about the implications of the financial performance and whether any state has required financial assurances like a bond or escrow.
- In discussions with current franchisees, a business advisor can help you frame questions about the level and quality of support they are currently receiving.
High Franchisee Turnover
Low Risk
Explanation
This specific risk was not identified in the FDD package. The data in Item 20 shows a very new system in the U.S. with only one franchisee, so there is no history of terminations, non-renewals, or other cessations. While no negative trend is evident, the lack of data itself means the system's stability and franchisee satisfaction are unproven. It is crucial to monitor future Item 20 disclosures as the system grows.
Potential Mitigations
- Your attorney should advise on the importance of speaking with the few existing franchisees to gauge their satisfaction and future intentions.
- Engaging a business advisor to help you understand the typical success and failure rates in this industry can provide valuable context.
- An accountant can help you model different scenarios to understand the financial performance required to remain viable.
Rapid System Growth
Low Risk
Explanation
This risk was not identified, as the data in Item 20 shows very slow growth in the United States, with only one franchised unit in operation over a two-year period. Rapid growth can strain a franchisor's support systems, but that does not appear to be a current risk here. Instead, the risk is related to the system being new and unproven in the U.S. market.
Potential Mitigations
- A business advisor can help you assess the franchisor's growth strategy and whether it is realistic and sustainable.
- It is wise to ask your attorney to review the franchisor's obligations for support as outlined in Item 11.
- Discussing the franchisor's capacity to support new locations with your financial advisor is a recommended step.
New/Unproven Franchise System
High Risk
Explanation
The Mucho Burrito system is very new and unproven in the United States. Item 20 data reveals the system had only one franchised outlet operating at the end of the most recent fiscal year. Investing in such an early-stage system carries higher risk, as its business model, brand recognition, and support infrastructure are not yet validated in the U.S. market. The success of the brand in Canada does not guarantee success in the U.S.
Potential Mitigations
- Performing extensive due diligence with your business advisor on the brand's performance in its home market (Canada) is critical.
- Ask your attorney to negotiate for more favorable terms, such as a reduced royalty rate for an initial period, to offset the higher risk.
- An accountant should help you create conservative financial projections, given the lack of a performance track record in the U.S.
Possible Fad Business
Medium Risk
Explanation
The fast-casual Mexican restaurant market is highly competitive. While not a temporary fad, the success of a specific brand like Mucho Burrito depends on its ability to differentiate itself and maintain long-term consumer interest. The FDD provides limited information on how the franchisor plans to innovate and adapt to ensure the brand's continued relevance and avoid becoming a passing trend within this competitive landscape.
Potential Mitigations
- With your business advisor, research the long-term trends and competition within the fast-casual Mexican food segment in your specific local market.
- Question the franchisor on their long-term strategy for product development, brand evolution, and marketing to stay competitive.
- Your financial advisor can help you assess the business model's resilience to economic shifts and changing consumer tastes.
Inexperienced Management
Low Risk
Explanation
This risk was not identified. The executives listed in Item 2 have extensive experience in the franchise industry, being associated with MTY Food Group and Kahala Brands, which are large, multi-brand franchisors. The presence of an experienced management team is a positive factor, as they likely have established systems for managing franchise operations, support, and development.
Potential Mitigations
- It is still prudent to research the public reputations of the key executives and the performance of other brands under their management with your business advisor.
- Ask your attorney to confirm that the key management team has long-term commitments to the company.
- During discussions with other franchisees, ask about their direct experiences with the leadership team.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified. Item 1 indicates that the ultimate parent company, MTY Food Group, Inc., is a publicly traded corporation, not a private equity firm. This ownership structure may imply a focus on longer-term operational growth rather than the short-term exit strategies often associated with private equity ownership, which can sometimes be a risk for franchisees.
Potential Mitigations
- Your financial advisor should still review the public filings of the parent company to understand its financial health and strategic priorities.
- A business advisor can help you assess the performance of other franchise brands within the parent company's portfolio.
- Consulting your attorney about the assignment clause in the Franchise Agreement remains important, regardless of ownership structure.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. The FDD clearly discloses the franchisor's direct and ultimate parent companies in Item 1. Since the parent company does not appear to be providing a financial guarantee for the franchisor's obligations, its financial statements are not required to be included in Item 21 under franchise law. The franchisor is providing its own audited financials for your review.
Potential Mitigations
- It is still worthwhile for your accountant to review the publicly available financial statements of the parent company for a complete picture of the overall organization's health.
- A business advisor can help investigate the relationship and flow of funds between the franchisor and its parent company.
- Your attorney can clarify if there are any indirect dependencies on the parent company that might pose a risk.
Predecessor History Issues
High Risk
Explanation
The FDD discloses a significant history of litigation and administrative actions in Item 3 related to numerous affiliated brands and predecessors under the MTY corporate umbrella. While the Mucho Burrito brand itself is new to the U.S., this pattern across sister brands suggests a corporate environment where franchisee disputes may be common. This history could be indicative of the corporate culture and practices you may encounter.
Potential Mitigations
- A franchise attorney must carefully review the litigation history of all affiliated entities to identify any recurring patterns or concerning claims.
- Discussing the corporate history with a business advisor can help you understand the potential risks of joining a large, multi-brand organization.
- When speaking with franchisees of other MTY brands, ask about their relationship with the parent company and its dispute resolution culture.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a significant number of concluded lawsuits and administrative actions involving the franchisor's affiliates and predecessors, such as Kahala, sweetFrog, and Papa Murphy's. The claims include misrepresentation, fraud, and violations of state franchise laws, often resulting in settlements paid to franchisees. This extensive litigation history across the parent company's system is a major red flag and may indicate a litigious culture or systemic issues that could affect your experience.
Potential Mitigations
- A thorough review of every case described in Item 3 with your franchise attorney is critical to understand the nature of the disputes.
- Independent research into these cases, with assistance from your legal counsel, could provide valuable insights beyond the FDD summary.
- Discuss this litigation history directly with the franchisor and gauge their response and perspective on these past issues.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Related Food Franchises
Bambu Franchising LLC
$149,000 to $328,000
Beard Papa’s
$163,500 to $701,100
Chicken Salad Chick
$777,000 to $1,049,500
Country Kitchen International
$415,000 to $1,674,000
Donatos Pizza
$541,818 to $1,068,174
Fuzzy’s Taco Shop
$517,900 to $1,555,500
Genji Franchising, LLC
$5,900 to $133,500
Grimaldi's
$1,389,800 to $1,835,000
Hawaiian Bros Island Grill
$50,000 to $250,000
Maui Wowi
$28,900 to $597,000
McDonald’s USA, LLC
$1,471,000 to $2,728,000
Wingstop
$298,200 to $1,013,500