making those Named Executive Officers more invested in the overall success of the brand. Ownership of
franchised restaurants by our current Named Executive Officers is listed below.
Management,
Supervision or
Royalties Accounting Fees
Paid to Paid to Us
Initial Us in in Fiscal Year
Franchise Royalty Fiscal Year 2018 2018
Restaurant Name and Ownership Fee Rate ($) ($)
Billings, MT ......... W. Kent Taylor (27.5%) — 4.0% 202,508 25,313
Scott M. Colosi (2.0%)
Everett, MA ......... W. Kent Taylor (28.75%) — 4.0% 264,839 33,105
Fargo, ND........... Scott M. Colosi (5.05%) — 4.0% 195,321 24,415
Lexington, KY........ W. Kent Taylor (5.0%) — 2.0% 102,955 20,713
McKinney, TX........ Scott M. Colosi (2.0%) — 4.0% 263,907 32,988
Melbourne, FL ....... W. Kent Taylor (17.0%) — — — 104,040
Muncie, IN.......... W. Kent Taylor (4.91%) — — 50,000 —
Omaha, NE.......... Scott M. Colosi (10.99%) — 4.0% 215,919 26,990
Port Arthur, TX ...... W. Kent Taylor (15.0%) — 4.0% 227,969 28,496
Scott M. Colosi (3.0%)
Wichita, KS.......... W. Kent Taylor (24.05%) — 4.0% 307,546 39,300
Scott M. Colosi (4.0%)
For the 2018 fiscal year, the total amount of distributions received by Mr. Taylor and Mr. Colosi
relating to their ownership interests in the above-referenced franchised restaurants were $1,598,976 and
$191,799, respectively. These amounts do not reflect compensation paid by the Company to Mr. Taylor
and/or Mr. Colosi during the 2018 fiscal year; rather, these amounts were paid by the applicable
franchise entity and reflect a return on investment in these separate restaurant locations.
On March 19, 2004, we entered into a preliminary franchise agreement with a company which is
95% owned by Mr. Taylor to develop a restaurant at a location which is to be determined. The terms
of the preliminary franchise agreement provide for no initial franchise fees and royalties of 3.5% of
restaurant sales. During fiscal year 2018, we received no payment from this franchise restaurant, as
none was due.
The franchise agreements and preliminary franchise agreement that we have entered into with our
Named Executive Officers contain the same terms and conditions as those agreements that we enter into
with our other domestic franchisees except, in some instances, the initial franchise fees and the royalty
rates, which are currently $40,000 and 4.0%, respectively, for our other domestic franchisees. We have the
contractual right, but not the obligation, to acquire the restaurants owned by our Named Executive
Officers based on a pre-determined valuation formula which is the same as the formula contained in the
domestic franchise agreements that we have entered into with other franchisees with whom we have such
rights. A preliminary agreement for a franchise may be terminated if the franchisee does not identify and
obtain our approval of its restaurant management personnel, locate and obtain our approval of a suitable
site for the restaurant or does not demonstrate to us that it has secured necessary capital and financing
to develop the restaurant. Once a franchise agreement has been entered into, it may be terminated if the
franchisee defaults in the performance of any of its obligations under the agreement, including its
obligations to operate the restaurant in strict accordance with our standards and specifications. A
franchise agreement may also be terminated if a franchisee becomes insolvent, fails to make its required
payments, creates a threat to the public health or safety, ceases to operate the restaurant or misuses the
Texas Roadhouse trademarks.