Does the Commercial General Liability insurance for a Del Taco franchise need to insure the contractual liability of the Franchisee under Section 16.1.3 of the Agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
ewal Certificates of Insurance shall be delivered to Del Taco no later than thirty (30) days prior to the expiration date of all policies. All deductible amounts on all insurance policies required hereunder shall be disclosed in writing to and shall be subject to approval by Del Taco, and noted on the applicable Certificate of Insurance. Requirements as of the date hereof are:
- 11.1.1.1 Commercial General Liability insurance, including Products Liability coverage, and Broad Form Contractual Liab
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the Commercial General Liability insurance must cover the contractual liability of the franchisee under Section 16.1.3 of the Franchise Agreement. This requirement is part of the broader insurance obligations that Del Taco franchisees must meet to protect both their business and the franchisor from potential liabilities.
Specifically, the Commercial General Liability insurance must include Products Liability coverage and Broad Form Contractual Liability coverage, written on a "per occurrence" policy form. The minimum coverage amount required is $5,000,000 combined single limit per occurrence and aggregate. This insurance must not exclude occurrences arising from food-borne illness, ensuring coverage for potential health-related incidents linked to the restaurant's operations.
This requirement means that a Del Taco franchisee needs to ensure their insurance policy explicitly includes coverage for their indemnification obligations as detailed in Section 16.1.3 of the Franchise Agreement. Section 16.1.3 requires the franchisee to indemnify Del Taco and its affiliates against claims, obligations, and damages arising from the agreement, the restaurant's operation, or the franchisee's actions, unless caused solely by Del Taco's gross negligence or willful misconduct. By mandating this insurance coverage, Del Taco aims to mitigate potential financial risks associated with legal claims and liabilities, ensuring that franchisees are adequately protected and can meet their contractual obligations.