Does the Del Taco Development Agreement restrict Del Taco's right to assign the contract?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- Conditions for Approval of Transfer. The language contained in Section 12.4 of the Franchise Agreement and Section 12 of the Development Agreement are hereby deleted in its entirety and the following is substituted in its place:
Franchisor and the transferor shall have executed a mutual general release, in a form prescribed by Franchisor, of any and all claims which each may have against the other and their affiliates, and their respective shareholders, directors, employees, and agents in their corporate and individual capacities, excluding only such claims as each may have that arise under the Hawaii Franchise Investment Law.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
Based on the 2025 Del Taco Franchise Disclosure Document, the document does not explicitly state any restrictions on Del Taco's right to assign the Development Agreement. However, the FDD includes a table that summarizes key provisions of the Development Agreement and Franchise Agreement, including those related to transfer of ownership. Specifically, it mentions Del Taco's right of first refusal to acquire the franchisee's business and Del Taco's option to purchase the franchisee's business under certain conditions. These sections may be relevant to understanding the full scope of transfer restrictions.
Item 17 includes information regarding the conditions for approval of transfer, stating that the language in Section 12.4 of the Franchise Agreement and Section 12 of the Development Agreement are deleted and replaced with a requirement for a mutual general release between the franchisor and transferor. This indicates that transfers are subject to certain conditions and mutual agreements.
To fully understand any restrictions on Del Taco's ability to assign the Development Agreement, a prospective franchisee should carefully review Section 12 of the Development Agreement, as well as related sections referenced in Item 17, and seek clarification from the franchisor regarding any limitations on their right to assign the agreement.