After expiration or termination of a Del Taco Development Agreement, what is the geographic limit on the non-competition covenant?

According to the 2025 Del Taco Franchise Disclosure Document, if the Development Agreement terminates or expires, the franchisee is restricted from having any interest in a competitive business. This restriction applies for two years following the termination or expiration of the agreement. The geographic scope of this restriction is limited to the protected area of any Restaurant operated under a franchise agreement executed pursuant to the Development Agreement or any other existing Del Taco restaurant. This covenant is subject to state law, meaning that specific state regulations may modify or supersede the terms outlined in the FDD.

This non-compete clause prevents former Del Taco franchisees from leveraging their knowledge and experience gained while operating a Del Taco franchise to directly compete with the brand in the immediate vicinity. The "protected area" is defined in the franchise agreement, and it is crucial for potential franchisees to understand the exact boundaries of this area before signing the agreement. The protected area could vary based on factors such as population density and market conditions.

Prospective franchisees should carefully review Section 17(e) of the Development Agreement, as referenced in the FDD, to fully understand the implications of the non-competition covenant. They should also consult with an attorney to determine how state law may affect the enforceability and scope of this provision. Understanding these restrictions is essential for planning future business ventures after the Del Taco franchise agreement ends.