Does the Del Taco Development Agreement grant exclusive development rights within a specific territory?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
ssion of Site Approval Packages and the development of Restaurants as set forth on Exhibit B to this Agreement.
- (g) "Restaurant" or "Restaurants" shall mean one or more Del Taco restaurants.
- (h) "Site Approval Package" shall mean the information and forms required by Section 7 of this Agreement.
- (i) "Alternative Point(s) of Distribution" shall mean those locations as further defined in Section 13(c) of this Agreement.
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- Grant of Development Rights. Del Taco hereby grants to the Developer, subject to the terms and conditions of this Agreement and as long as the Developer complies with this Agreement and all other agreements with Del Taco, limited exclusive Development Rights for Restaurants identified on Exhibit B. The Developer shall have limited exclusive rights to develop Restaurants—that is, Del Taco will not establish, or grant franchises for others to establish, Del Taco Restaurants—in the Development Area for the term of this Agreement. The Developer shall submit Site Approval Packages and shall develop and open the total number of Restaurants set forth on and in accordance with the Development Schedule. This Agreement is not a franchise agreement and does not grant the Developer any right to use the Del Taco System or any part of the Del Taco System. The Developer shall have no right under this Agreement to license others to use the Del Taco System or any part of this Del Taco System.
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- Term. This Agreement and all Development Rights shall expire immediately upon the required opening date for the last Restaurant set forth on the Development Schedule or the actual opening date for the last Restaurant, whichever first occurs, unless sooner terminated in accordance with the terms and conditions of this Agreement.
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- Time of Essence. Time is of the essence of this Agreement.
5. Fees. The Developer shall pay to Del Taco the following fees:
- (a) In consideration of the Development Rights granted in this Agreement, the Developer shall pay to Del Taco a fully non-refundable Development Fee of $35,000 for the first Restaurant scheduled for opening and $10,000 for each additional Restaurant scheduled for opening, payable upon execution and delivery by the Developer of this Agreement. As between Developer and Del Taco, Del Taco shall earn the
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the Development Agreement grants limited exclusive development rights for restaurants within a defined Development Area, as specified in Exhibit B of the agreement. This exclusivity means that Del Taco will not establish or franchise others to establish Del Taco restaurants within the Development Area during the term of the agreement, provided the developer complies with all terms and conditions. The Development Area is defined in Exhibit A of the Development Agreement.
However, this territorial protection is not absolute. The agreement specifies that certain locations within the Development Area are excluded, such as airports, university campuses, hospitals, transportation facilities, amusement parks, government facilities, malls, stadiums, and other similar sites, which Del Taco may develop themselves or franchise to others. Del Taco retains the right to develop or franchise these 'Alternative Points of Distribution' regardless of their location within the Development Area, and such actions do not constitute a breach of the agreement.
Furthermore, the development rights are contingent upon the developer meeting their obligations under the Development Agreement, including adhering to the Development Schedule outlined in Exhibit B. Failure to meet these obligations can result in the termination of the territorial protection. The agreement also emphasizes that it is not a franchise agreement and does not grant the developer the right to use the Del Taco System until a Franchise Agreement is executed for each specific restaurant location. The Development Rights also cannot be transferred.
Prospective Del Taco developers should carefully review Exhibits A and B of the Development Agreement to understand the specific boundaries of their Development Area and the development schedule they must adhere to. They should also be aware of the excluded locations within their territory where Del Taco can establish other restaurants, as well as the conditions under which their territorial protection could be terminated. Understanding these limitations is crucial for assessing the potential and risks associated with the development agreement.