What is the definition of 'competitive business' in the context of a Del Taco franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in the Agreement | Summary |
|---|---|---|
| q. Non-competition covenants during the term of the franchise | 10.5 | You cannot use the Del Taco System or any other names, marks, systems, logotypes, symbols or foodstuffs provided by us or an approved supplier in connection with another Restaurant; you cannot operate any “competitive business”, which means a Restaurant or food service business that offers one or more Mexican or similar style menu items, and is operated in a quick service, fast food, or fast casual format. (subject to state law) |
| r. Non-competition | 10.6 | For a period of two years, you cannot operate a |
| covenants after the | competitive business within two miles of your | |
| franchise terminates or | original location or any other existing Del Taco | |
| expires | Restaurant. (subject to state law) |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a 'competitive business' is defined within the context of non-competition covenants during the term of the franchise agreement. Specifically, a franchisee cannot operate any business that uses the Del Taco system or its associated names, marks, systems, logotypes, symbols, or foodstuffs in connection with another restaurant.
Furthermore, a 'competitive business' is defined as a restaurant or food service business that offers one or more Mexican or similar style menu items and operates in a quick service, fast food, or fast-casual format. This restriction is subject to state law, meaning the specific enforcement and interpretation of this clause can vary depending on the state in which the franchise operates.
This definition is important for prospective franchisees as it restricts their ability to engage in other food service businesses, particularly those that might be similar to Del Taco. Franchisees need to be aware of these restrictions to avoid violating the franchise agreement and potentially facing legal consequences. Additionally, after the franchise terminates or expires, there are further non-competition covenants in place for a period of two years within two miles of the original Del Taco location or any other existing Del Taco restaurant, also subject to state law.