Is the covenant not to compete in the Del Taco Franchise Agreement and Development Agreement, which extends beyond termination, always enforceable under California law?

According to Del Taco's 2025 Franchise Disclosure Document, the enforceability of the non-compete covenant that extends beyond the termination of the franchise agreement or development agreement is not guaranteed under California law. Specifically, Item 17 includes an exhibit that addresses state-specific addenda, including one for California.

The California addendum states that the Franchise Agreement and Development Agreement contain a covenant not to compete that extends beyond the termination of the franchise. However, it explicitly notes that this provision may not be enforceable under California law. This means that a California court might not uphold the non-compete clause if a dispute arises.

Prospective Del Taco franchisees in California should be aware of this uncertainty. It is advisable to consult with legal counsel to fully understand the implications of the non-compete clause and its potential enforceability in California. This is particularly important if a franchisee anticipates wanting to engage in a similar business after the franchise agreement ends.