factual

What actions are the franchisees required to take under the Del Taco Development Agreement?

Del_Taco Franchise · 2025 FDD

Answer from 2025 FDD Document

o may, at its option, require Developer and its landlord to execute a lease addendum, incorporating the above provisions, in such form as Del Taco may designate. Del Taco, in its sole and absolute discretion, may waive any one or more of the foregoing requirements, and the Developer shall not have any rights or claims against Del Taco if Del Taco waives or fails to insist on the compliance with any of the foregoing requirements.

    1. Franchise Agreement. Subject to Del Taco's written approval of a proposed site and the construction plans for the Restaurant proposed for development at the site, Del Taco shall send the Developer a Franchise Agreement for the proposed site using the then-current form of Franchise Agreement being offered to new Del Taco franchisees. Prior to the commencement of construction of the Restaurant, and within 10 days (or any longer time required by law) after the receipt of the Franchise Agreement from Del Taco for an approved site, the Developer shall execute the Franchise Agreement and return it to Del Taco, together with all payments then due Del Taco. Promptly upon Del Taco's receipt of the properlyexecuted Franchise Agreement and all payments then due Del Taco, Del Taco shall execute the same and return a copy to the Developer. If Del Taco does not receive the properly-executed Franchise Agreement and all payments than due Del Taco within that 10-day period, Del Taco shall have the right to revoke its approval of the proposed site and, if Del Taco revokes its approval, the Developer shall have not have any right to open a Restaurant on that site.
    1. Acquisition, Development and Construction of Restaurant Site. The Developer shall have sole responsibility for the acquisition (through purchase, lease, sublease or otherwise), development and construction of a Restaurant on the approved site.
    1. Pre-Construction Obligations of Developer. The Developer shall not begin construction of any Restaurant unless the following events have taken place:
  • (a) Del Taco has approved the site, without conditions, in accordance with Section 7 of this Agreement.
  • (b) The Developer has obtained the right to use the site, either by purchase or lease, and has obtained and provided a fully executed copy of the lease or asset purchase agreement, including the recorded deed, to Del Taco and has obtained all necessary permits, governmental approvals, and other necessary rights to construct, maintain and operate a Restaurant on the approved site. Developer shall provide a certified copy of any and all related acquisition documents to Del Taco as requested.
  • (c) Del Taco has approved the Developer's general contractor and architect pursuant to Del Taco's requirements.

  • (d) Del Taco has approved the Developer's Site Approval Package and final site plan, layout and construction plans, with the understanding that Del Taco's approval of a Site Approval Package and any site plan, layout or plans does not constitute any representation, warranty or guarantee by Del Taco regarding the future success of the site for a Restaurant.
    1. Construction Requirements. As soon as the Developer has acquired the right to use the site, obtained all necessary permits and governmental approvals; otherwise obtained the rights to construct, maintain and operate the Restaurant; and entered into a construction contract for the Restaurant, the Developer shall notify Del Taco and shall commence construction of the Restaurant in accordance with the following terms and conditions:
  • (a) Unless the Developer is remodeling an existing building, the Developer shall construct the Restaurant in accordance with the site plan approved by Del Taco for the Restaurant and with Del Taco's standard construction plans, specifications and layouts, subject, however, to any alterations required by any applicable law, regulation or ordinance as determined by Developer's architect or other professional retained by Developer. Del Taco shall approve or reject any proposed site plan within 15 days after the receipt of the same from the Developer. If the Developer must make any alterations to the site plan approved by Del Taco or to any of Del Taco's construction plans, specifications or layouts, for any reason, Del Taco must approve those alterations before the Developer begins any work. The Developer acknowledges that Del Taco's approval of any alterations to its standard construction plans, specifications or layouts does not constitute any representation, warranty or guarantee by Del Taco that the alterations will result in the construction of a successful, operating Restaurant or comply with local building codes or ordinances. The Developer shall pay the cost, including engineering and architectural fees, incurred in obtaining approvals by the appropriate governmental authorities of the site plan, construction plans, specifications and layout.
  • (b) If Developer is remodeling an existing building, Del Taco must approve all remodel plans and specifications before the Developer begins any work.
  • (c) During the course of construction of the Restaurant, the Developer shall permit authorized personnel of Del Taco to enter the Restaurant at any time during normal business hours, with or without notice, for the purpose of inspecting and examining the construction of the Restaurant to ascertain whether it complies with the terms of this Agreement. The Developer shall cooperate and shall cause its general contractor to cooperate with Del Taco's representatives by rendering any assistance reasonably requested. Upon notice from Del Taco, the Developer, at its sole cost and expense, promptly shall correct any deficiencies detected by an inspection.
    1. Restrictions on and Obligations of the Developer. The Developer acknowledges and agrees as follows:
  • (a) This Agreement includes only the right to select sites for the construction of Restaurants and to submit the same to Del Taco for its approval. This Agreement does not include the grant of a license by Del Taco to the Developer of any rights to use the Del Taco System or any part of this Del Taco System or to open or operate any Restaurants within the Development Area. The Developer shall obtain the license to use those additional rights at each Restaurant upon the execution of each Franchise Agreement by both the Developer and Del Taco and by payment of the franchise fee set forth in Section 5 of this Agreement.
  • (b) The Development Rights granted under this Agreement constitute personal services and the Developer cannot sell, assign, transfer or encumber them, in whole or in part.

  • (c) The Developer shall have no right to use in its name the name "Del Taco," "Del" or other names used by Del Taco.
  • (d) The Developer shall indicate clearly the independent ownership of the Developer's business.
  • (e) The Developer shall indemnify and hold Del Taco harmless from any liability, damage or cost (including reasonable attorneys' fees) as a result of claims, demands or judgments, of any kind or nature, by any person or entity, arising out of, or otherwise connected with, this Agreement, the Development Rights, the acquisition of any restaurant site, or the development or construction of any Restaurant.
  • (f) In connection with any development or construction of any Restaurant under this Agreement, the Developer shall comply with all applicable state, federal and local laws, rules and regulations applicable to its development and construction.
  • (g) Concurrent with the execution of this Agreement, if the Developer is not an individual, each holder of an ownership interest in the Developer shall execute the Personal Guarantee included with this Agreement and must be listed in Exhibit C.
  • (h) The Developer shall meet with representatives of Del Taco at the Developer's Restaurant or business offices, annually upon Del Taco's reasonable request, to review the Developer's staffing, sales, future development plans, the Developer's qualification status for further development, and any other matters Del Taco reasonably may determine to review.
  • (i) Concurrent with the opening of the first Restaurant under this Agreement, the Developer shall install at its business office, if any, a computer system compatible with and that meets all the same standards as the computer system in each Restaurant, including the installation of any dedicated telephone and power lines and modems required to bring the computer system "on-line" with Del Taco's computer system at its headquarters. Del Taco shall have the right to access the Developer's computer system, as Del Taco decides necessary or appropriate, to retrieve data and information relating to the Restaurants, including (without limitation) daily sales, menu mix, point of sale, bookkeeping, operations and financial information; customer survey results; and inventory information. Should Del Taco develop proprietary software programs, system documentation manuals, and other proprietary materials in connection with the operation of the Restaurants, the Developer shall utilize Del Taco's proprietary software and programs and, upon request by Del Taco, shall pay a software license fee and execute a standard form of software license agreement. The Developer also shall purchase from Del Taco any new or upgraded proprietary software programs, manuals and computer- related materials that Del Taco decides to adopt or upgrade at the prices and upon the terms Del Taco may establish.
    1. Retention of Rights.

Source: Item 23 — RECEIPTS (FDD pages 59–325)

What This Means (2025 FDD)

According to Del Taco's 2025 Franchise Disclosure Document, franchisees, also referred to as developers, have several obligations under the Development Agreement. These include actions related to site approval, construction, and adherence to the Del Taco system. Specifically, the developer must obtain Del Taco's written approval for a proposed site and construction plans before starting construction. Within 10 days of receiving the Franchise Agreement for an approved site, the developer must execute and return it to Del Taco with all due payments. The developer is solely responsible for acquiring, developing, and constructing the restaurant on the approved site. They must also secure the right to use the site through purchase or lease, providing Del Taco with a fully executed copy of the lease or asset purchase agreement, including the recorded deed, and obtain all necessary permits and governmental approvals.

Prior to construction, Del Taco must approve the site without conditions, and the developer must obtain the right to use the site, providing Del Taco with a fully executed copy of the lease or purchase agreement and all necessary permits. The developer must also have Del Taco's approval of their general contractor and architect. The lease agreement must include provisions such as the landlord agreeing to send default notices to Del Taco, Del Taco having the right to cure defaults and assume the lease, restrictions on the real estate use to a Del Taco restaurant, consent for Del Taco's signage, and the developer's right to assign the lease to Del Taco or another franchisee. The lease should also grant the developer the right to remodel every ten years and to de-identify the premises upon termination of the Franchise Agreement.

There are also several actions that constitute a default under the Development Agreement. These include failing to submit a complete Site Approval Package by the deadline, starting construction before site and plan approval, failing to open restaurants by the scheduled time, using the Del Taco system without a valid Franchise Agreement, having an interest in a competing Mexican restaurant, failing to remit payments, beginning work before satisfying all conditions, attempting to assign rights under the agreement, making misrepresentations to Del Taco, failing to obtain required prior written approval, and defaulting on any obligation under the Development Agreement or any other agreement with Del Taco.

Del Taco may require the developer to pay for a trade area survey analysis if the proposed site is near an existing restaurant and may reject a site or require a business impact payment to affected franchisees based on the survey results. Del Taco's approval of a site does not guarantee its success, and Del Taco can refuse to approve a site within one mile of another Del Taco restaurant or if it negatively impacts existing restaurants. The agreement also specifies that Del Taco can make decisions based on its best interests, even if those decisions are adverse to the franchisee's interests, without liability, unless expressly prohibited by the agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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