What determines the initial term length for a Del Taco franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2.1 Term. Except as otherwise provided herein and unless sooner terminated in accordance with the provisions hereof, the initial term of this Agreement shall commence on the Effective Date and expire on the date that is the earlier of (a) twenty (20) years after the opening date of the Restaurant or (b) the expiration date of the lease for the Restaurant premises, including all applicable extensions or renewals.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the initial term of the Franchise Agreement begins on the Effective Date and ends either 20 years after the restaurant's opening date or on the expiration date of the restaurant's lease, including any extensions or renewals, whichever comes first. This means a franchisee's initial term could be shorter than 20 years if the lease on the property expires before that 20-year mark.
For a prospective Del Taco franchisee, this highlights the importance of negotiating a lease term that aligns with the desired franchise term. If a franchisee secures a lease shorter than 20 years, they risk having to renegotiate the lease or relocate the restaurant to continue operating under the Del Taco brand after the initial lease expires. The franchisee bears the responsibility of securing the location for the duration of the term.
It is also important to note that the franchisee has the option to renew the agreement for an additional term. This renewal term is also subject to the lease's expiration date, meaning the renewal period could be less than 20 years if the lease does not extend that far. This condition is fairly standard in the franchise industry, as a business's physical location is critical to its operations and brand presence.