factual

Besides termination, what actions can Del Taco take if a Del Taco franchisee is not in compliance with the agreement?

Del_Taco Franchise · 2025 FDD

Answer from 2025 FDD Document

greement:

  • 13.6.1 Del Taco may require Franchisee to close the Restaurant and take the necessary steps to bring the Restaurant (including the operation, maintenance of the equipment and premises, repair and restoration of the Restaurant) into strict conformity with Del Taco's standards and specifications and the requirements of this Agreement. Franchisee shall not reopen the Restaurant until Franchisee has brought it into conformity with Del Taco's standards and specifications;
  • 13.6.2 Del Taco may modify, or eliminate completely, the Protected Area described in Section 1.2 above;
  • 13.6.3 Del Taco may elect, but has no obligation, to assume complete operating control and possession of the Restaurant and operate the same in the capacity of a receiver. Del Taco shall apply funds received from that operation, first to the payment of all of Del Taco's costs and expenses of operation (including a management fee), then to the current obligations of Franchisee to Del Taco or any third party, and then to the past due obligations of Franchisee to Del Taco or any third party, with any remaining funds paid over to Franchisee;
  • 13.6.4 Del Taco may disable access to or remove all or any references to the Restaurant or webpage(s) of the Restaurant from the Authorized Website or any other services or listings, until such time as the default is fully cured;

If any of such rights, options, arrangements, or areas are terminated or modified in accordance with this Section 13.6, such action shall be without prejudice to Del Taco's right to terminate this Agreement in accordance with Sections 13.2 or 13.3 above, and/or to terminate any other rights, options or arrangements

under this Agreement at any time thereafter for the same default or as a result of any additional defaults of the terms of this Agreement.

14. Obligations Upon Termination or Expiration.

  • 14.1 Upon termination or expiration of this Agreement, all rights granted hereunder to Franchisee shall forthwith terminate, and:
  • 14.1.1 Cease Operations. Franchisee shall immediately cease to operate the Restaurant, and shall not thereafter, directly or indirectly, represent to the public or hold Franchisee out as a present or former franchisee of Del Taco.
  • 14.1.2 Cease Use of Proprietary Marks. Franchisee shall immediately and permanently cease to use, in any manner whatsoever, any confidential methods, procedures and techniques associated with the System, the mark "Del Taco" and all other Proprietary Marks and distinctive forms, slogans, signs, symbols, and devices associated with the System. In particular, Franchisee shall cease to use all signs, advertising materials, displays, stationery, forms, and any other articles that display the Proprietary Marks, remove all such articles and/or permit Del Taco to enter the Restaurant and remove or permanently cover all signs or advertisements identifiable in any way with Del Taco's name or business, at Franchisee's expense.
  • 14.1.3 Cancellation of Assumed Names. Franchisee shall take such action as may be necessary to cancel any assumed name or equivalent registration which contains the Proprietary Mark "Del Taco" and all other Proprietary Marks, and/or any other service mark or trademark, and Franchisee shall furnish Del Taco with evidence satisfactory to Del Taco of compliance with this obligation within five (5) days after termination or expiration of this Agreement.
  • 14.1.4 Pay Monies Owed; Liquidated Damages.

Source: Item 22 — CONTRACTS (FDD pages 58–59)

What This Means (2025 FDD)

According to Del Taco's 2025 Franchise Disclosure Document, besides termination, Del Taco has several options when a franchisee is not in compliance with the franchise agreement. Del Taco may prevent the franchisee from reopening the restaurant until it conforms to Del Taco's standards. Del Taco can also modify or completely eliminate the Protected Area, which defines the franchisee's exclusive territory.

Furthermore, Del Taco has the option to assume complete operating control of the restaurant, acting as a receiver. In this role, Del Taco will use the restaurant's funds to cover operational costs, management fees, and the franchisee's current and past due obligations to Del Taco or third parties, with any remaining funds going to the franchisee. Del Taco can also disable access to the restaurant's webpage or remove it from any authorized websites or listings until the default is resolved.

It is important to note that these actions do not prevent Del Taco from later terminating the agreement for the same default or any additional defaults. Del Taco retains the right to make changes to the Del Taco system as long as those changes are not expressly prohibited in the agreement. Del Taco can make decisions based on its judgment of what is in the best interest of the Del Taco system and brand overall.

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.