What constitutes a 'Competitive Business' that a Del Taco franchisee is prohibited from being involved with during the term of the agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.5.2 Except as otherwise approved in writing by Del Taco directly or indirectly own, maintain, operate, engage in, have any interest in or provide any assistance to (whether as owner, stockholder, partner, officer, director, employee, consultant, franchisor, lessor, or otherwise) any "Competitive Business," which shall mean a restaurant or food service business that offers one or more Mexican or similar style menu items, and is operated in a quick service, fast food, or fast casual format.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a 'Competitive Business' is defined as any restaurant or food service operation that offers Mexican or similar style menu items. This definition applies to businesses operating in a quick service, fast food, or fast casual format.
During the term of the franchise agreement, a Del Taco franchisee is prohibited from directly or indirectly owning, maintaining, operating, engaging in, having any interest in, or providing assistance to a Competitive Business, unless Del Taco provides written approval. This restriction applies regardless of the franchisee's role, whether as an owner, stockholder, partner, officer, director, employee, consultant, franchisor, or lessor.
This non-compete clause is fairly standard in the franchise industry, as franchisors like Del Taco aim to protect their brand and market share. Prospective franchisees should carefully consider this restriction, especially if they have prior experience or interests in similar food service businesses. Obtaining written approval from Del Taco to engage in any potentially competitive business is crucial to avoid violating the franchise agreement.