When a company-owned Del Taco restaurant is converted to a franchised restaurant, what factors are considered when negotiating the purchase price?

According to Del Taco's 2025 Franchise Disclosure Document, when a company-owned Del Taco restaurant is converted to a franchised restaurant, the purchase price is negotiated. Several factors are taken into account during this negotiation. These factors include the value of the restaurant's equipment, signs, cash flow, and leasehold or other real property interests. In addition to these tangible and financial considerations, the franchise fee will also be included in the purchase price.

This negotiated purchase price provides a degree of flexibility in determining the final cost for a franchisee looking to take over an existing Del Taco location. Unlike a fixed initial investment, the negotiated price allows for adjustments based on the specific assets and performance of the restaurant being converted. This can be beneficial, as it allows both Del Taco and the franchisee to agree on a fair market value based on the restaurant's current condition and potential.

Prospective franchisees should carefully evaluate each of these factors during the negotiation process. Understanding the value of the equipment, the strength of the cash flow, and the terms of the lease are crucial for making an informed decision. Engaging professional advisors, such as appraisers or financial consultants, may be beneficial to ensure a comprehensive assessment of the restaurant's value and to negotiate the most favorable terms.

It's important to note that the franchise fee is added to the negotiated price, so franchisees should factor this into their overall investment calculation. While the negotiation process offers some flexibility, franchisees should be prepared to conduct thorough due diligence and potentially seek expert advice to ensure they are making a sound investment when converting a company-owned Del Taco restaurant.