What condition has the California Department of Financial Protection and Innovation imposed on Del Taco regarding the collection of initial fees from California franchisees?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The California Department of Financial Protection and Innovation has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the California Department of Financial Protection and Innovation has placed a condition on Del Taco regarding the collection of initial fees from franchisees in California. Because Del Taco has not demonstrated that it is adequately capitalized and/or must rely on franchise fees to fund its operations, the Commissioner has imposed a fee deferral condition.
This condition mandates that Del Taco must defer the collection of all initial fees from California franchisees. This deferral lasts until Del Taco has fulfilled all of its pre-opening obligations to the franchisee and the franchisee's Del Taco location is open for business.
For franchisees in California who enter into a development agreement with Del Taco, the payment of development and initial fees tied to a specific unit within their development schedule is also deferred. These fees are not due until the specific unit is open and operating.