After the Del Taco franchise agreement terminates, can the franchisee contest the validity or ownership of the Del Taco system?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
8.3.1 The Proprietary Marks are valid, owned by Del Taco, and serve to identify the System and those who are authorized to operate under the System.
8.3.2 Neither Franchisee nor any Principal of Franchisee shall directly or indirectly contest the validity or Del Taco's ownership of the Proprietary Marks, nor shall Franchisee, directly or indirectly, seek to register the Proprietary Marks with any government agency, except with Del Taco's express prior written consent.
1.4 Goodwill and Del Taco Name.
Except as expressly provided by this Agreement, Franchisee shall acquire no right, title or interest in and to the System.
Any and all goodwill associated with the System shall inure exclusively to Del Taco's benefit; and, upon the expiration or termination of this Agreement for any cause whatsoever, Del Taco shall not have any obligation to pay any money for any goodwill associated with Franchisee's use of the System.
Franchisee shall not take any action whatsoever to contest the validity or ownership of the System or the goodwill associated with the System.
Franchisee shall have no right to use in its entity name (if applicable) the name "Del Taco," "Del" or any other names used by Del Taco.
- 14.1.2 Cease Use of Proprietary Marks.
Franchisee shall immediately and permanently cease to use, in any manner whatsoever, any confidential methods, procedures and techniques associated with the System, the mark "Del Taco" and all other Proprietary Marks and distinctive forms, slogans, signs, symbols, and devices associated with the System.
- 14.1.3 Cancellation of Assumed Names.
Franchisee shall take such action as may be necessary to cancel any assumed name or equivalent registration which contains the Proprietary Mark "Del Taco" and all other Proprietary Marks, and/or any other service mark or trademark, and Franchisee shall furnish Del Taco with evidence satisfactory to Del Taco of compliance with this obligation within five (5) days after termination or expiration of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, franchisees are prohibited from contesting the validity or Del Taco's ownership of the proprietary marks, both during the term of the agreement and after termination. Specifically, the franchise agreement states that franchisees acknowledge the validity and Del Taco's ownership of the proprietary marks and that they will not directly or indirectly contest this ownership. This restriction extends to preventing franchisees from seeking to register the proprietary marks with any government agency without Del Taco's express prior written consent.
This provision is further reinforced by stipulations regarding the use of the Del Taco name and system. Franchisees cannot take any action to contest the validity or ownership of the system or the goodwill associated with it. Upon termination of the franchise agreement, franchisees must cease using the "Del Taco" name and other proprietary marks, and they must cancel any assumed name registrations that include these marks.
These clauses are designed to protect Del Taco's brand and intellectual property. By agreeing to these terms, a franchisee acknowledges Del Taco's exclusive rights to the system and proprietary marks and agrees not to challenge those rights. This is a standard practice in franchising, where the franchisor's brand and system are critical assets.
Failure to comply with these provisions can lead to termination of the franchise agreement and potential legal action. The franchisee's acknowledgement of Del Taco's ownership and the agreement not to contest it are essential components of the franchise relationship, ensuring the protection of Del Taco's intellectual property and brand identity.