Can Del Taco audit a franchisee's data processing and security practices?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
5.17.5.8 Allow and contribute to reasonable audits by Del Taco, including inspections by Del Taco or its auditor, to verify Franchisee's compliance with data processing and security obligations and applicable data protection statutes and regulations.
7.4 Audit.
Del Taco or its designated agents shall have the right at all reasonable times to examine, copy, receive, and/or personally review or audit, at Del Taco's expense, all books, records, and sales and income tax returns of Franchisee.
The inspection or audit will be conducted at the location where the business records are customarily maintained or, at Del Taco's discretion, transmitted to Del Taco in digital or hardcopy format as Del Taco may require.
Franchisee shall cooperate fully with all audits and requests for information made by Del Taco or its designees.
Del Taco shall also have the right, at any time, to have an independent audit made of the books of Franchisee.
If an inspection should reveal that any payments have been understated or overstated in any report to Del Taco, then Franchisee shall immediately pay Del Taco, in the event of an understatement, the amount understated upon demand, in addition to interest from the date such amount was due until paid, at the rate of one and one half percent (1.5%) per month, or the maximum rate permitted by law, whichever is less.
If an inspection is necessitated because Franchisee fails to timely provide Sales Reports or if an inspection discloses an understatement in any report by Franchisee of two percent (2%) or more, Franchisee shall, in addition, reimburse Del Taco for any and all costs and expenses connected with the inspection (including, without limitation, travel, lodging and wages expenses, and reasonable accounting and legal costs).
The foregoing remedies shall be in addition to any other remedies Del Taco may have.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, Del Taco can audit a franchisee's data processing and security practices. Specifically, Del Taco is permitted to conduct reasonable audits, including inspections by Del Taco or its auditor, to verify a franchisee's compliance with data processing and security obligations, as well as applicable data protection statutes and regulations. This audit helps Del Taco ensure that franchisees are adhering to the necessary standards for protecting personal information.
Del Taco's right to audit extends to all books, records, and sales and income tax returns of the franchisee. These audits can be conducted at the location where the business records are maintained or, at Del Taco's discretion, the franchisee may be required to transmit the records to Del Taco in digital or hardcopy format. The franchisee is obligated to cooperate fully with these audits and any requests for information made by Del Taco or its designees. Del Taco will bear the expense of these audits unless the inspection reveals an understatement in any report by the franchisee of two percent or more, or if the inspection is necessitated by the franchisee's failure to provide timely sales reports.
If an audit reveals that payments have been understated, the franchisee must immediately pay the understated amount, along with interest calculated at 1.5% per month (or the maximum rate permitted by law, whichever is less) from the date the amount was originally due. Furthermore, if the audit is triggered by the franchisee's failure to provide sales reports on time or if it uncovers an understatement of 2% or more, the franchisee will be responsible for reimbursing Del Taco for all costs associated with the inspection. These costs may include travel, lodging, wages, accounting, and legal expenses. These remedies are in addition to any other remedies Del Taco may pursue.