What are the 'Development Rights' granted in the Del Taco Development Agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
submission 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 Development Fee upon the execution of this Agreement and shall not have any obligation to refund any portion of the Development Fee.
- (b) Upon the execution by the Developer of a Franchise Agreement, Del Taco shall credit from the Development Fee $35,000 for the first Restaurant scheduled for opening and $10,000 for each subsequent Restaurant scheduled for opening towards the initial franchise fee for each of those Restaurants. The Developer shall pay the balance of the initial franchise fee for the second and each subsequent Restaurant scheduled for opening. The Developer acknowledges that, once it has executed a Franchise Agreement for a Restaurant, the Developer will not have the right to a refund of any portion of the foregoing fees.
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 developers limited exclusive rights to develop Del Taco restaurants within a specific Development Area, as outlined in Exhibit B of the agreement. Del Taco will not establish or franchise others to establish Del Taco restaurants in the Development Area during the agreement's term, provided the developer adheres to the agreement's terms and all other agreements with Del Taco.
The developer is obligated to submit Site Approval Packages and develop/open the total number of restaurants according to the Development Schedule. The agreement specifies that it is not a franchise agreement and does not grant the developer the right to use the Del Taco System or license others to do so. The Development Rights and the agreement itself expire upon the required opening date for the last restaurant on the Development Schedule or the actual opening date, whichever comes first, unless terminated earlier.
Del Taco retains certain rights, including the right to construct and operate Del Taco restaurants and use the Del Taco System outside the Development Area, and to license others to do the same. They also retain the right to develop, use, and franchise trade names, trademarks, and copyrights associated with the Del Taco System for other franchise systems outside the Development Area. The developer's rights are limited to selecting sites for restaurants and submitting them for Del Taco's approval; the developer cannot sell, assign, transfer, or encumber these rights. The developer also cannot use the Del Taco name in their business name and must clearly indicate independent ownership.
Prospective developers should carefully review Exhibit A (Development Area) and Exhibit B (Development Schedule) to fully understand the scope and limitations of the Development Rights. They should also be aware of the conditions under which territorial protection may terminate and the specific locations excluded from the agreement, such as airports, universities, and hospitals. Understanding these details is crucial for assessing the potential and obligations associated with a Del Taco development agreement.