What financial obligations must a Del Taco franchisee satisfy to be eligible for renewal?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
f, the initial term of this Agreement shall commence on the Effective Date and expire on the date that is the earlier of (a) twenty (20) years after the opening date of the Restaurant or (b) the expiration date of the lease for the Restaurant premises, including all applicable extensions or renewals.
- 2.2 Renewal. Franchisee may, at its option, renew Franchisee's right to operate the Restaurant for one (1) additional term which shall be the lesser of (a) twenty (20) years or (b) the remaining term of the lease for the Restaurant premises, including all applicable extensions or renewals, subject to the following conditions, each of which must be met prior to such renewal:
- 2.2.1 Franchisee shall deliver to Del Taco a written notice of Franchisee's election to renew no fewer than twelve (12) months nor more than eighteen (18) months prior to the end of the initial term;
- 2.2.2 Franchisee shall pay in lieu of the initial franchise fee, a renewal fee equal to the greater of (a) $35,000 or (b) Del Taco's then-current initial franchise fee for a new Del Taco Restaurant when Franchisee delivers the written notice required under Section 2.2.1;
- 2.2.3 Franchisee shall not have received, prior to its election to renew, written notice of a default under this Agreement on more than 3 separate occasions and, from the time of Franchisee's election to renew through the expiration of the initial term, Franchisee or its affiliates shall not have been in default of any provision of this Agreement, any amendment to this Agreement, or any other agreement between Franchisee and Del Taco or its affiliates; and, in the reasonable judgment of Del Taco, Franchisee shall have substantially complied with all the terms and conditions of this Agreement, such other agreements, as well as the operating standards prescribed by Del Taco during the initial term;
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, a franchisee must meet specific monetary obligations to be eligible for renewal. The franchisee must have satisfied all monetary obligations owed to Del Taco and its affiliates, and must have consistently met these obligations throughout the initial franchise term. This indicates that all fees, royalties, and other payments must be current and up-to-date to qualify for renewal.
In addition to satisfying all monetary obligations, the franchisee must also pay a renewal fee. This renewal fee is equal to the greater of $35,000 or Del Taco's then-current initial franchise fee for a new Del Taco Restaurant. This fee is payable when the franchisee delivers written notice of their election to renew the franchise agreement.
Furthermore, the franchisee must not have received written notice of a default under the agreement on more than 3 separate occasions prior to their election to renew. From the time of the election to renew through the expiration of the initial term, the franchisee or its affiliates must not be in default of any provision of the agreement or any other agreement with Del Taco or its affiliates. Del Taco must also reasonably judge that the franchisee has substantially complied with all terms and conditions of the agreements and operating standards during the initial term. These conditions ensure that only franchisees in good financial and operational standing are granted the opportunity to renew their franchise agreement.