Can an arbitrator stay the effectiveness of a pending termination of the Del Taco franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as otherwise provided in this Agreement, the arbitrator will have the authority to award any interim, interlocutory, or final remedy or relief that a court of the State of California could order or grant, including, without limitation, general damages, specific performance of any obligation created under this Agreement, the issuance of an injunction or other extraordinary relief, or the imposition of sanctions for abuse or frustration of the arbitration process; however, the arbitrator may not under any circumstances: (i) stay the effectiveness of any pending termination of this Agreement; (ii) assess punitive or other prohibited damages; or (iii) make an award that extends, modifies, or suspends any lawful term of this Agreement or its related agreements or any reasonable standard of business performance that we set.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, an arbitrator does not have the authority to stay the effectiveness of any pending termination of the Franchise Agreement. While the arbitrator can award interim, interlocutory, or final remedies that a California court could order, including specific performance or injunctions, their powers are specifically limited.
Specifically, the arbitrator cannot stay a pending termination, assess punitive damages, or make any award that extends, modifies, or suspends any lawful term of the agreement or any reasonable business performance standard set by Del Taco. This limitation ensures that Del Taco retains control over franchise terminations and operational standards, even during arbitration.
This means a Del Taco franchisee facing termination cannot rely on arbitration to temporarily halt the termination process. The termination will proceed unless the franchisee obtains a stay through a court of law, if available. This aspect is crucial for prospective franchisees to understand, as it highlights the limitations of arbitration in disputes related to franchise termination.