Before beginning construction of a Del Taco restaurant, what must a franchisee demonstrate regarding the lease agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
If you decide to lease the land on which you operate your Restaurant, we have the right to require that certain provisions are included in the lease relating to use, default, notices, lien waivers, length of term, assignment, remodeling, personal property rights, the right for authorized Del Taco employees to enter your Restaurant, the right for Del Taco to protect its proprietary marks located on your premises and noncompetition by the landlord and its affiliates. Those provisions are contained in the Addendum to Lease, which is attached to the Franchise Agreement as Exhibit G. We make no representations or warranties as to the legal validity of any of those provisions. Before you begin construction of your Restaurant, you must demonstrate to our reasonable satisfaction that your lease contains the required provisions described in the Addendum to Lease, and you must deliver to us a definitive copy of your lease before its execution for our review and approval of the terms related to the Addendum to Lease.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–30)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, before starting construction on a Del Taco restaurant, a franchisee must demonstrate that their lease agreement contains specific provisions outlined in the Addendum to Lease (Exhibit G of the Franchise Agreement). This demonstration must be to Del Taco's reasonable satisfaction. Additionally, the franchisee must provide Del Taco with a definitive copy of the lease for review and approval before the lease is officially executed. This review focuses on ensuring that the terms align with the requirements detailed in the Addendum to Lease.
The Addendum to Lease includes provisions related to various aspects of the lease, such as the permitted use of the property, what constitutes a default, required notices, lien waivers, the length of the lease term, assignment rights, remodeling conditions, personal property rights, and the right for authorized Del Taco employees to access the restaurant. It also covers Del Taco's right to protect its trademarks on the premises and ensures non-competition by the landlord and its affiliates. Del Taco does not guarantee the legal validity of these provisions, so franchisees should consult with their own legal counsel.
This requirement ensures that Del Taco maintains a degree of control over the leased property and protects its brand and operational standards. By reviewing and approving the lease, Del Taco aims to minimize potential conflicts with landlords and ensure that the lease terms support the successful operation of the franchise. This is a fairly standard practice in franchising, as franchisors often need to ensure that lease agreements align with their brand standards and operational needs.
Prospective franchisees should carefully review the Addendum to Lease (Exhibit G) and consult with a real estate attorney to ensure that the lease agreement complies with Del Taco's requirements. Failing to meet these requirements could delay or prevent the construction of the restaurant, leading to potential financial losses and a breach of the franchise agreement.