What is the definition of 'Guaranteed Obligations' in the context of the Del Taco Guaranty?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Concurrent with its execution of this Agreement, if the Developer is not an individual, each holder of an equity interest in the Developer (e.g., shareholder, partner, member) shall execute this Personal Guarantee.
Personal Guarantee
Each of the undersigned hereby personally guarantees the performance of any and all obligations (the "Obligations") of this Development Agreement. Each of the undersigned agrees that Del Taco or its successor or assignee may proceed against the undersigned directly and independently of the Developer, and the cessation of the liability of the Developer for any reason other than the full performance of all Obligations, or any extension, renewal or forbearance of the performance of the Obligations, or any impairment or suspension of Del Taco's or its successor's or assignee's remedies or rights against the Developer, shall not in any way affect the liability of the undersigned.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, if the Developer is not an individual, each equity interest holder in the Developer must execute a Personal Guarantee concurrent with the execution of the Development Agreement. This Personal Guarantee ensures the performance of all obligations of the Development Agreement, referred to as "the Obligations."
Each person who signs the Personal Guarantee agrees that Del Taco can take action against them directly, regardless of whether they also take action against the Developer. The liability of the guarantor remains even if Del Taco extends, renews, or shows forbearance in the performance of the obligations, or if Del Taco's rights against the Developer are impaired or suspended. This means the guarantor's responsibility is independent of the Developer's and continues until all obligations are fully performed.
This type of guarantee is common in franchising, especially when dealing with business entities rather than individual franchisees. It ensures that Del Taco has recourse to the personal assets of the individuals behind the entity, providing an additional layer of security for the fulfillment of the Development Agreement's obligations. Prospective Del Taco developers should carefully review the terms of the Personal Guarantee and understand the full extent of their potential liability.