Does the Del Taco franchise agreement create a joint employer relationship between Del Taco and the franchisee?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
rd, or decree of any court, agency, or other governmental instrumentality, or within three (3) days occurrence of any accident or injury which may adversely affect the operation of the Restaurant or Franchisee's financial condition, or give rise to liability or a claim against Franchisee or Del Taco.
16. Independent Contractor and Indemnification.
16.1 It is understood and agreed by the parties hereto that this Agreement does not in any way create the relationship of principal, agent, fiduciary, joint venture, joint employer, or employer/employee between Del Taco and Franchisee; that Franchisee shall be an independent contractor; and that nothing in this Agreement is intended to constitute either party an agent, legal representative, subsidiary, joint venturer, joint employer, partner, employee, or servant of the other for any purpose whatsoever. For the avoidance of doubt, Del Taco is not the employer or joint employer of Franchisee or Franchisee's employees.
- 16.1.1 Identification as Independent Contractor.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the franchise agreement explicitly states that it does not create a joint employer relationship between Del Taco and the franchisee. The agreement specifies that the franchisee is an independent contractor and that nothing within the agreement is intended to establish either party as an agent, legal representative, subsidiary, joint venturer, joint employer, partner, employee, or servant of the other for any purpose. For clarity, Del Taco is not considered the employer or joint employer of the franchisee or the franchisee's employees.
This independent contractor status has several implications for a prospective Del Taco franchisee. The franchisee is responsible for complying with all federal, state, and local laws, including employment, labor, and wage and hour laws, as well as tax laws and local operating regulations. They are also responsible for obtaining all necessary permits, certificates, and licenses required for operating the restaurant. This includes business licenses, health certificates, fictitious name registrations, sales tax permits, and fire clearances.
Furthermore, the franchisee is obligated to indemnify Del Taco for any costs, losses, or damages incurred by Del Taco due to the franchisee's actions or omissions, including those related to any finding of joint employer status. This means that if a third party claims that Del Taco is a joint employer and Del Taco incurs expenses as a result, the franchisee is responsible for covering those costs. This indemnification clause underscores the importance of the franchisee's role in managing their business and employees in compliance with all applicable laws and regulations.
In summary, the Del Taco franchise agreement is structured to maintain a clear distinction between the franchisor and franchisee, with the franchisee operating as an independent contractor. This arrangement places significant responsibility on the franchisee for managing their business and employees, while also protecting Del Taco from potential liabilities arising from the franchisee's operations.