Taco del Mar

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Taco del Mar
Type Wholly owned subsidiary
Industry Restaurant
Founded Seattle, Washington, United States (June 8, 1992 (1992-06-08))
Headquarters Lynnwood, Washington, United States
Area served United States and Canada
Products Fresh Mex
Parent Franchise Brands, LLC
Website [2]

Taco del Mar is a Seattle, Washington-based Fresh Mex fast casual restaurant chain that specializes in Mission burritos. Since opening in Seattle on June 8, 1992 by brothers James and John Schmidt, it has expanded into over 260 locations in the U.S. and Canada. It is known for its relaxed, seaside-themed decor.

The name "Taco del Mar," meaning "taco of the sea" in Spanish, refers to the chain's original specialty – fish tacos. Like the larger Subway chain, the customer directs the preparation of his or her meal, requesting ingredients as it moves along an assembly line. A standard selection of "Mission Style" (referring to San Francisco's Mission District) Mexican ingredients is available, including wheat, flour, tomato, or spinach tortillas, and fish, beef, pork, or chicken.

2008 franchisee lawsuit

In 2007, Taco del Mar announced that more than 30 franchisees closed their restaurants.citation needed Taco del Mar executives cited poor sales and bad locations as the cause of the closures. Previously Taco del Mar closed restaurants throughout the Dallas and Boston markets due to poor financial performance.

However, a group of franchisees and Master Developers called The Truth About Taco del Marcitation needed charged that several Taco del Mar executives took secret kickbacks from various suppliers that raised restaurant operating costs, hurting franchisee profitability and contributing to the store closures. There is no evidence of alleged kickbacks; furthermore, Taco del Mar founder James Schmidt said if there ever were kickbacks proven, the money would be returned to the Franchisee.

There has not been one credible example of kickbacks ever brought to the attention of an attorney, posted here or any one else, that has come to my attention. If we were getting kickbacks and it was proven then franchisees would get money back, we disclose we do not get kickback so if we took them, then prove it and money will be returned - James Schmidt

The group also claims that Taco del Mar intentionally removed former franchises from its uniform offering circular (UFOC) to mislead potential investors into purchasing restaurants from the franchise. In December 2007, reporter Julie Bennett conducted an investigation and found many franchisees outside of Washington and Oregon were losing money at Taco del Mar.1

More than 20 franchisees are currently preparing a class-action lawsuit to recover costs from Taco del Mar Franchising Corp and Conrad & Barry Investments. In November 2007, Taco del Mar Franchising Corp President David Huether resigned.2 Less than one month later, Neal Hollingsworth, Taco del Mar's VP of Franchising Sales also resigned and left the Seattle/Tacoma area.3

Failure rates of restaurants is commonly thought to be high. Recent studies have mitigated some of those assumptions, but still show three-year failure rates of all restaurants to be about 61.4%, and that franchise restaurants fare slightly better than independently owned locations.

2008 explosion in Vancouver

During the early morning hours of February 13, 2008, a Taco del Mar franchise in Vancouver, British Columbia was destroyed by a large explosion which damaged several nearby businesses. Police confirmed that the blast was caused by an arsonist who had placed an accelerant inside the restaurant, then set it on fire.4 Vancouver-area police later arrested Kamal Jeet Singh Josan,5 suffering from burns to over 40% of his body.6 The motive for this act is currently not publicly known.6 In April 2009, charges against Josan were stayed due to lack of evidence. Harjit Nandha denied police claims that Josan was a family friend.7 Prosecutors took up the file again in January 2010, and Josan plead guilty to one charge of arson on March 14, 2011.89 Josan was sentenced to two years of house arrest on June 13, 2011.10

Manjeet Nanda, one of the co-owners of the bombed restaurant, was later found dead of an apparent suicide. In an earlier interview, she indicated that she originally intended to sell the franchise before it was destroyed.1112

2010 bankruptcy filing

On Friday, January 22, 2010, Taco del Mar filed for Chapter 11 bankruptcy protection in Seattle. Among its major creditors were Suzanne Todd, a franchisee in Maryland, with a disputed claim for $500,000; Paul & Shahnaz Hendifar, with a $125,416 judgment entered in Texas; Canada Revenue Agency, with a $105,324 tax claim, and the city of Seattle, with a $95,289 claim for taxes.13

Taco del Mar was auctioned in a bankruptcy sale on September 30, 2010, and the winning bid of $3.25 million came from Connecticut company Franchise Brands LLC, according to a story in the Seattle Times.14

Franchise Brands was created in 2005 by Fred De Luca and Peter Buck, the founders of Subway restaurants. Both Subway and Franchise Brands LLC are based in Milford, Conn.

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