What does the Del Taco Franchise Agreement grant the franchisee the right to do?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
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BACKGROUND:
- A. Del Taco, as the result of the expenditure of significant time, skill, effort and money, has developed a distinctive and proprietary system (the "Del Taco System" or "System") for establishing and operating restaurant businesses, which specialize in the sale of Mexican-American foods such as tacos and burritos, along with burgers, shakes and desserts, French fries, breakfast items, soft drinks, and such additional or alternate menu and other items as Del Taco may designate from time to time for on-premises and off-premises consumption ("Menu Items");
- B. Del Taco and Franchisee have executed a Franchise Agreement ("Franchise Agreement") granting Franchisee the right to operate one (1) Del Taco restaurant (the "Restaurant") and to produce and distribute products and services approved by Del Taco and use the Proprietary Marks in connection therewith under the terms and conditions of the Franchise Agreement;
- C. The Member, by virtue of his or her position with Franchisee, will gain access to certain of Del Taco's Confidential Information, as defined herein, and must therefore be bound by the same confidentiality and non-competition agreement that Franchisee is bound by.
IN CONSIDERATION of these premises, the conditions stated herein, and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows:
- Confidential Information. Obligee shall not, during the term of the Franchise Agreement or thereafter, communicate, divulge, or use for the benefit of any other person, persons, partnership, entity, association, or corporation any confidential information, trade secrets, knowledge, or know how concerning the methods of operation of the Restaurant which may be communicated to Obligee or of which Obligee may be apprised by virtue of Franchisee's operation under the terms of this Agreement. Any and all information, knowledge, know how, and techniques which Del Taco designates as confidential shall be deemed confidential for purposes of this Agreement, except information which Obligee can demonstrate came to its attention prior to disclosure thereof by Del Taco; or which, at or after the time of disclosure by Del Taco to Franchisee, had become or later becomes a part of the public domain, through publication or communication by others. Notwithstanding any other provision of this Agreement, there may be certain, limited circumstances where applicable law allows for the disclosure of certain trade secrets, as specified in the Manuals.
2. Covenants Not to Compete.
(a) Obligee specifically acknowledges that, pursuant to the Franchise Agreement, and by virtue of its position with Franchisee, Obligee will receive valuable specialized training and confidential information, including information regarding the operational, sales, promotional, and marketing methods and techniques of Del Taco and the System.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, the Franchise Agreement grants the franchisee the right to operate one Del Taco restaurant and to produce and distribute products and services approved by Del Taco. The franchisee is also allowed to use Del Taco's Proprietary Marks in connection with these operations, under the terms and conditions outlined in the Franchise Agreement. This agreement is contingent upon both Del Taco and the franchisee fulfilling their obligations as detailed in the agreement.
Furthermore, if the franchisee has also entered into a Development Agreement for developing at least five Del Taco Restaurants, and remains compliant with all agreements, they may be eligible for a Development Incentive Program. This program includes reduced Royalty Fees for the first four years of a restaurant's operation, starting at 1% of Net Sales for the first year and increasing to 5% in subsequent years. However, these incentives are contingent upon adhering to the development schedule specified in the Development Agreement; failure to do so requires the franchisee to immediately repay any reduction in Initial Franchise Fees or Royalty Fees received.
It's important to note that the franchisee cannot transfer the addendum granting these incentives or the rights associated with it. Except for the specific modifications outlined in the addendum, all other terms of the Franchise Agreement remain in full effect. Del Taco retains the right to construct and operate other Del Taco restaurants and to use the Del Taco System outside the Development Area, as well as to license others to do the same.