Does the FDD specify any conditions under which the Del Taco Development Fee might be waived or reduced?
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.
- (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.
- (c) Notwithstanding any provision of the Agreement to the contrary, if Developer is not able to timely meet its Development Schedule, and provided that Developer and its affiliates are in full compliance with all agreements with Del Taco, Developer may request a twelve-month extension of one or more of the development deadlines in the Development Schedule, which extension Del Taco may grant or deny at its sole option. To request an extension of a development deadline, Developer must provide Del Taco at least six months' advance written notice.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the Development Fee is generally non-refundable. However, the FDD outlines specific instances where the Development Fee can be credited towards other fees or where development incentives may be reduced based on certain conditions.
The Development Fee is $35,000 for the first restaurant and $10,000 for each additional restaurant. Upon the execution of a Franchise Agreement, Del Taco will credit these amounts towards the initial franchise fee for each restaurant. This means the franchisee doesn't get a refund of the Development Fee, but it is applied to offset the initial franchise fee.
Del Taco may reduce or withhold development incentives if a proposed site is projected to negatively impact existing company-owned restaurants, according to their business impact policy. Additionally, if a developer fails to meet the development schedule, Del Taco can require them to pay back any reduction in initial franchise or royalty fees they may have received as part of a development incentive program. Therefore, while the Development Fee itself isn't waived, the franchisor may adjust other financial incentives based on the franchisee's performance and the potential impact of new locations on existing Del Taco restaurants.