In the event of the death of a guarantor, what obligations of the Del Taco Guarantee is the estate bound by?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
This Guarantee shall terminate upon the termination or expiration of the Agreement, except that all obligations and liabilities of the undersigned which arose from events which occurred on or before the effective date of such termination shall remain in full force and effect until satisfied or discharged by the undersigned, and all covenants which by their terms continue in force after the expiration or termination of the Agreement shall remain in force according to their terms. Upon the death of an individual guarantor, the estate of such guarantor shall be bound by this Guarantee, but only for defaults and obligations hereunder existing at the time of death; and the obligations of the other guarantors will continue in full force and effect.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, in the event of the death of a guarantor, the guarantor's estate will be bound by the Guarantee. However, this obligation is limited to defaults and obligations that existed at the time of death. The obligations of any other guarantors will remain in full effect.
This means that if a Del Taco franchisee has a guarantor for their obligations under the Franchise Agreement, and that guarantor passes away, the guarantor's estate becomes responsible for any outstanding debts or unfulfilled obligations that the franchisee had at the time of the guarantor's death. The estate is not responsible for any new debts or obligations the franchisee incurs after the guarantor's death.
This provision protects Del Taco by ensuring that existing financial commitments are honored even after the death of a guarantor. It also provides some limitation of liability for the guarantor's estate, preventing it from being responsible for future debts. Franchisees should be aware of this clause and discuss it with their guarantors and legal counsel to ensure everyone understands the potential liabilities and responsibilities.