What constitutes a 'Competitive Business' according to the Del Taco agreement?

According to the 2025 Del Taco Franchise Disclosure Document, a 'Competitive Business' is defined as any business that offers one or more Mexican or similar style menu items and operates in a quick service, fast food, or fast casual format. This definition is relevant to the non-compete clauses within the Del Taco franchise agreement, which restrict franchisees and certain related parties from engaging in competitive businesses during the term of the agreement and for a specified period afterward.

Specifically, the Del Taco agreement states that franchisees cannot own, maintain, operate, engage in, be employed by, or have any interest in any business meeting the definition of 'Competitive Business'. This restriction applies not only to direct competition using the Del Taco System but also to any similar food service business. The agreement also prohibits franchisees from diverting or attempting to divert any business or customer of the Restaurant or of any Restaurant using the System to any competitor.

These non-compete provisions are designed to protect Del Taco's market position, trade secrets, and confidential information. Violation of these terms can lead to legal action, including injunctions and financial penalties, as Del Taco considers such breaches a material violation of the franchise agreement and a tortious interference with their rights. Prospective franchisees should carefully consider these restrictions and their implications for any future business ventures before entering into an agreement with Del Taco.