Does the Del Taco franchise agreement designate Del Taco as a third-party beneficiary of employee confidentiality covenants?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Any employee who may have access to any Confidential Information regarding the Restaurant shall execute a covenant that s/he will maintain the confidentiality of information they receive in connection with their association with Franchisee. Such covenants shall be on a form provided by Del Taco, which form shall, among other things, designate Del Taco as a third party beneficiary of such covenants with the independent right to enforce them.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, the franchise agreement does designate Del Taco as a third-party beneficiary of employee confidentiality agreements. Specifically, any employee who has access to confidential information must sign a covenant to maintain confidentiality. Del Taco provides the form for this covenant.
This designation as a third-party beneficiary grants Del Taco the independent right to enforce these confidentiality agreements. This means that if an employee violates the confidentiality agreement, Del Taco can directly take legal action against the employee, regardless of whether the franchisee (the employer) chooses to do so. This provides Del Taco with an additional layer of protection for its confidential information and trade secrets.
This is a fairly common practice in franchising, as franchisors need to protect their proprietary information and systems. By being a third-party beneficiary, Del Taco ensures it has the legal means to protect its interests, even if a franchisee is unwilling or unable to enforce the confidentiality agreements themselves. This clause underscores the importance Del Taco places on maintaining the secrecy of its operational methods and other confidential information.