What is the fee associated with the Royalty for Del Taco?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
The Royalty Fee (which is currently 5% of Net Sales) will be reduced to: (i) 1% of Net Sales for the first year of a Restaurant's operations; (ii) 2% of Net Sales for the second year of a Restaurant's operations; (iii) 3% of Net Sales for the third year of a Restaurant's operations; (iv) 4% of Net Sales for the fourth year of a Restaurant's operations; and (v) 5% of Net Sales for all subsequent years.
Adherence to Development Schedule. The Developer must develop each Restaurant according to the development schedule of the Development Agreement to qualify for the development incentives described in this Addendum. In the event the Developer breaches the Development Agreement or Franchise Agreement, in addition to the other rights and remedies available to Del Taco under the Development Agreement and Franchise Agreement, Developer shall immediately pay to Del Taco the amount of any reduction in the Initial Franchise Fees or Royalty Fees.
Transferability. The Developer shall not have any rights to transfer this Addendum or the rights granted to the Developer by it.
No Other Modifications. Except as specifically set forth in this Addendum, the terms of the Development Agreement shall remain unchanged and in full force and effect.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to the 2025 Del Taco FDD, the standard royalty fee is 5% of Net Sales. However, Del Taco offers a Development Incentive Program that reduces the royalty fee for developers opening multiple restaurants in undeveloped or emerging markets.
Under this program, the royalty fee is reduced according to the following schedule: 1% of Net Sales for the first year, 2% for the second year, 3% for the third year, 4% for the fourth year, and 5% for all subsequent years. To qualify for these reduced royalty fees, the developer must adhere to the development schedule outlined in their Development Agreement and remain fully compliant with all agreements with Del Taco.
If a developer fails to meet the development schedule or breaches any agreement, they will be required to immediately pay Del Taco the amount of any reduction in the initial franchise fees or royalty fees they have received. This incentive is non-transferable, and all other terms of the Development Agreement remain in effect.