How does the Development Fee for Del Taco compare to the Initial Franchise Fee?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
re 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 Development Fee upon the execution of this Agreement and shall not have any obligation to refund any portion of the Development Fee.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a developer pays a Development Fee for the rights to develop Del Taco restaurants in a specific area. This fee is $35,000 for the first restaurant and $10,000 for each additional restaurant scheduled to open. This fee is non-refundable once paid to Del Taco.
When the developer executes a Franchise Agreement for a specific restaurant, Del Taco credits a portion of the Development Fee towards the Initial Franchise Fee. The credit is $35,000 for the first restaurant and $10,000 for each subsequent restaurant. The developer is responsible for paying the remaining balance of the Initial Franchise Fee.
In essence, the Development Fee acts as a deposit towards the Initial Franchise Fees for the restaurants the developer commits to building. This structure incentivizes developers to proceed with opening multiple Del Taco locations, as a portion of their initial investment is directly applied to the franchise fees for each restaurant. This arrangement is common in multi-unit franchise development agreements.