What conditions regarding monetary obligations and other duties must a Del Taco franchisee meet to be eligible for a franchise transfer?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
see, at Franchisee's expense, shall upgrade the Restaurant to conform to the then-current standards and specifications of new Restaurant then being established in the System, and shall complete the upgrading and other requirements set forth in this Section 12.4.6 or as required under Section 5.9 above within the time specified by Del Taco.
- 12.4.7 All of Franchisee's monetary obligations hereunder shall be paid in full on a current basis, and Franchisee must not be otherwise in default of any of Franchisee's obligations hereunder including Franchisee's reporting obligations.
- 12.4.8 The transferor shall remain liable for all of the obligations to Del Taco in connection with the Restaurant that arose prior to the effective date of the transfer, and any covenants that survive the termination or expiration of this Agreement, and shall execute any and all instruments reasonably requested by Del Taco to evidence such liability.
- 12.4.9 At Franchisee's expense, one (1) owner designated by Del Taco to be a new Operating Principal and any of Franchisee's Restaurant Managers that Del Taco designates shall successfully complete (to Del Taco's satisfaction) all training programs required by Del Taco upon such terms and conditions as Del Taco may reasonably require (and while Del Taco will not charge a fee for attendance at such training programs, the transferee shall be responsible for the salary and all expenses of the person who attends training).
- 12.4.10 In connection with any proposed transfer, to compensate Del Taco for Del Taco's legal, accounting, training, and other expenses incurred in connection with the transfer, Franchisee shall pay Del Taco a non-refundable transfer fee in the amount of Five Thousand Dollars ($5,000). The transfer fee shall be paid at the earlier of (a) when the transferee signs the new franchise agreement, or (b) when the transferee begins training. The transfer fee is non-refundable.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a franchisee must meet several conditions to be eligible for a franchise transfer. Del Taco requires that all monetary obligations be paid in full and kept current, and the franchisee must not be in default of any obligations, including reporting obligations. This ensures that the franchise is in good financial standing before a transfer can proceed.
Additionally, the franchisee must cover a non-refundable transfer fee of $5,000 to compensate Del Taco for expenses related to the transfer, such as legal, accounting, and training costs. This fee is due when the transferee signs the new franchise agreement or begins training, whichever comes first. If the transfer is not completed due to reasons other than Del Taco's disapproval, the franchisee or proposed transferee must reimburse Del Taco for all costs incurred during the evaluation process, including attorney and accountant fees, background checks, site evaluations, and training, to the extent that the initial transfer fee does not cover these expenses.
Furthermore, the transferor remains liable for all obligations to Del Taco that arose before the transfer's effective date, including any covenants that survive the agreement's termination or expiration. The transferor must also execute any instruments reasonably requested by Del Taco to evidence this liability. Del Taco also stipulates that the new owners must meet certain educational, managerial, and business standards, possess good moral character, business reputation, and credit rating, and have the aptitude and financial resources to operate the restaurant. These conditions collectively aim to protect Del Taco's interests and ensure the continued success of the franchise under new ownership.