What is the coverage basis for the building insurance required for a Del Taco franchise?

According to Del Taco's 2025 Franchise Disclosure Document, franchisees are required to maintain "All Risk" property insurance. This insurance must cover the building, including tenant improvements, furniture, fixtures, equipment, inventory, and other tangible property of the restaurant. The coverage must be on a full one hundred percent (100%) repair or replacement value basis, ensuring that in the event of a loss, the property can be fully repaired or replaced to its original condition. This requirement protects both the franchisee's investment and Del Taco's brand standards by ensuring the restaurant can quickly return to its pre-loss state.

In addition to covering the physical building and its contents, the "All Risk" property insurance must also include Business Interruption/Business Income insurance. This coverage should be for at least one (1) year of actual loss sustained, including Extra Expense insurance, which helps to re-establish normal business operations as quickly as possible. Furthermore, the policy must include loss of rents insurance covering a minimum of twelve (12) months' fixed minimum rent. This ensures that even if the restaurant is temporarily closed due to a covered event, the franchisee can continue to meet their rental obligations.

Del Taco also requires franchisees to maintain Builders' All Risk insurance during any construction, renovation, refurbishing, or remodeling of the restaurant. This policy must cover the full replacement cost of all real and personal property involved in the construction. This requirement is in place to protect against losses that may occur during the construction phase, ensuring that the project can be completed without significant financial setbacks. By mandating these specific insurance coverages, Del Taco aims to mitigate potential risks and ensure the continuity of its franchise operations.