What does Del Taco define as 'Allowances' in the context of supplier agreements?

According to Del Taco's 2025 Franchise Disclosure Document, 'Allowances' are defined as all manufacturing allowances, marketing allowances, rebates, credits, monies, payments, or benefits offered by suppliers to the franchisee, Del Taco, or its affiliates based upon the franchisee's purchases of products, goods, and services. These allowances may be based on System-wide purchases of food, beverages, paper goods, merchandise, and other items.

Del Taco retains the right to collect and retain all such Allowances. The franchisee assigns all rights, titles, and interests in these Allowances to Del Taco or its designee, authorizing them to collect and retain these without restriction, unless the supplier instructs otherwise. This means that while franchisees may be the ones making the purchases that trigger these allowances, the financial benefits typically accrue to Del Taco rather than the franchisee.

This arrangement is important for prospective franchisees to understand, as it affects the overall economics of their operations. While franchisees are responsible for managing supplier relationships and ensuring timely payments, the financial benefits derived from supplier programs are directed to Del Taco. Franchisees should consider this when evaluating the potential profitability of a Del Taco franchise and factor it into their financial projections. It is a fairly common practice in franchising for the franchisor to negotiate system-wide discounts and rebates, but it is not always the case that the franchisor retains all of the benefits.