What covenants must a Del Taco franchisee require and obtain from their owners and Operating Principal?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.8 Individual Covenants.
Franchisee shall require and obtain execution of covenants similar to those set forth in Sections 8, 9, 10, 12, and 14 (as modified to apply to an individual, if applicable) from any or all of Franchisee's owners holding a ten percent (10%) or greater interest in Franchisee and the Operating Principal.
The covenants required by this Section 10.8 shall be in the form provided in Exhibit F to this Agreement.
Franchisee shall deliver to Del Taco copies of such executed covenants immediately upon Del Taco's request.
Failure by Franchisee to obtain execution of a covenant required by this Section 10.8 shall constitute a default under Sections 10.5 and 10.6 above.
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 secure covenants from their owners and Operating Principal that are similar to those outlined in Sections 8, 9, 10, 12, and 14 of the franchise agreement. These covenants must be modified to apply to individuals where necessary.
The specific form for these covenants is detailed in Exhibit F of the agreement. The franchisee is obligated to provide Del Taco with copies of these executed covenants immediately upon request. Failure to obtain these covenants constitutes a default under Sections 10.5 and 10.6 of the agreement.
This requirement ensures that individuals with a significant stake (10% or greater interest) in the Del Taco franchise, as well as the Operating Principal, are bound by similar obligations and restrictions as the franchisee. This protects Del Taco's interests and maintains consistency across its franchise network. The covenants cover various aspects of the franchise operation, including confidentiality, non-competition, and adherence to system standards, as indicated by the reference to Sections 8, 9, 10, 12, and 14.