For Del Taco, what constitutes an 'owner' according to the franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
is Agreement will require Del Taco to remain in the business of operating or licensing the operation of Del Taco Restaurants or other businesses or to offer any services or products to Franchisee, whether or not bearing the Proprietary Marks, if Del Taco transfers or assigns its rights in or obligations under this Agreement and the System.
- 12.2 Owners. If Franchisee is a business entity, each owner and the interest of each of them in Franchisee, is identified in Exhibit D hereto. Franchisee represents and warrants that its owners are set forth on Exhibit D attached to this Agreement, and covenant that Franchisee will not permit the identity of such owners, or their respective interests in Franchisee, to change without complying with this Agreement.
- 12.3 Franchisee Transfers. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that Del Taco has granted this franchise in reliance on Franchisee or its owners' business skill, financial capacity, and personal character. Accordingly:
- 12.3.1 Franchisee shall not, without Del Taco's prior written consent, transfer, pledge or otherwise encumber: (a) this Agreement or any of Del Taco's rights and obligations under this Agreement;
- (b) all or substantially all of the assets of the Restaurant; (c) the leases or any other interest in the Restaurant; or (d) any direct or indirect ownership interest in Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, if the franchisee is a business entity, each owner and their interest in the franchisee is identified in Exhibit D of the franchise agreement. Del Taco requires that the franchisee represents and warrants that its owners are set forth on Exhibit D attached to the Agreement, and covenant that Franchisee will not permit the identity of such owners, or their respective interests in Franchisee, to change without complying with this Agreement.
For a corporation or limited liability company, the recipient of any voting securities or securities convertible into voting securities can be designated as an owner by Del Taco. For partnerships or limited partnerships, changes such as admitting additional general partners, removing a general partner, or materially altering the powers of any general partner require Del Taco's prior written consent.
Furthermore, an owner's interest in the franchisee, as shown in Exhibit D, cannot be transferred, pledged, or encumbered without Del Taco's prior written consent. These stipulations ensure that Del Taco maintains control over the ownership and management structure of its franchisees, safeguarding the brand's reputation and operational consistency. Prospective franchisees should carefully review Exhibit D and understand the implications of these restrictions on ownership changes and transfers.