What is the definition of 'Permanent Disability' in the context of a Del Taco franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon Franchisee's permanent disability or the permanent disability of any owner with a controlling interest in Franchisee, Del Taco may require Franchisee's or the owner's interest to be transferred to a third party approved by Del Taco within six (6) months after notice to Franchisee. "Permanent Disability" shall mean any physical, emotional, or mental injury, illness, or incapacity that would prevent a person from performing the obligations set forth in this Agreement for at least six (6) consecutive months and from which condition recovery within six (6) consecutive months from the date of determination of disability is unlikely.
If Del Taco and Franchisee or Franchisee's representative disagree as to whether a person has a permanent disability, the existence of the permanent disability shall be determined by a licensed practicing physician selected by Del Taco upon examination of such person or, if such person refuses to be examined, then such person shall automatically be deemed permanently disabled for the purposes of this Section 12.8 as of the date of refusal.
Del Taco shall pay the cost of the required examination.
- 12.9 Notification Upon Death or Permanent Disability.
Within ten (10) days after the death or permanent disability of Franchisee (if a natural person) or an owner, Franchisee or Franchisee's representative shall notify Del Taco of the death or permanent disability in writing.
Any transfer upon death or permanent disability will be subject to the same terms and conditions set out in this Section 12 for any inter vivos transfer.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a 'Permanent Disability' is defined within the context of transferring ownership. If a franchisee or an owner with controlling interest experiences a physical, emotional, or mental injury, illness, or incapacity that prevents them from fulfilling their obligations under the Franchise Agreement for at least six consecutive months, and recovery within six months from the disability determination is unlikely, it is considered a 'Permanent Disability'.
Del Taco retains the right to require the transfer of the franchisee's or owner's interest to a Del Taco-approved third party within six months of notifying the franchisee of this requirement. If there is a disagreement between Del Taco and the franchisee regarding the existence of a permanent disability, Del Taco will select a licensed physician to examine the person in question. If the person refuses examination, they will automatically be deemed permanently disabled for the purposes of this section of the agreement.
Del Taco will cover the cost of the examination. The franchisee is obligated to notify Del Taco in writing within ten days of the death or permanent disability of the franchisee or an owner. Any transfer of ownership due to death or permanent disability is subject to the same terms and conditions as any other transfer of ownership. This clause ensures that Del Taco maintains control over who operates its franchises, even in situations where the original franchisee is no longer able to do so.