What is the effect of a Del Taco franchisee losing the right to possession of the restaurant?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
13.2.4 If Franchisee at any time without the written consent of Del Taco ceases to operate or otherwise abandons the Restaurant for three (3) consecutive business days, or loses the right to possession of the Restaurant, or otherwise forfeits the right to do or transact business in the jurisdiction where the Restaurant is located; provided, however, that if, through no fault of Franchisee, the premises are damaged or destroyed by an event such that repairs or reconstruction cannot be completed within ninety (90) days thereafter, then Franchisee shall have thirty (30) days after such event in which to apply for Del Taco's approval to relocate and/or reconstruct the Restaurant, which approval shall not be unreasonably withheld;
13.2.19 If the right of Franchisee to possess the Restaurant terminates for any reason whatsoever.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, if a franchisee loses the right to possess their restaurant for any reason, it constitutes an immediate default under the franchise agreement. Specifically, Section 13.2.19 states that the franchise agreement can be terminated immediately if "the right of Franchisee to possess the Restaurant terminates for any reason whatsoever." This means Del Taco can terminate the agreement without providing an opportunity for the franchisee to cure the default, as losing possession falls under the conditions described in Section 13.2.
However, there is an exception. According to section 13.2.4, if the loss of possession is due to damage or destruction of the premises through no fault of the franchisee, and repairs or reconstruction cannot be completed within 90 days, the franchisee has 30 days to apply for Del Taco's approval to relocate and/or reconstruct the restaurant. Del Taco's approval for relocation or reconstruction cannot be unreasonably withheld.
In practical terms, a Del Taco franchisee needs to ensure they maintain continuous legal possession of the restaurant premises. Failure to do so, for instance, due to lease termination or eviction, can lead to the immediate termination of their franchise agreement, unless the loss of possession is due to damage outside of the franchisee's control. The franchisee would then need to seek approval from Del Taco to relocate or rebuild the restaurant.