What must a Del Taco franchisee immediately deliver to Del Taco upon termination or expiration of the Franchise Agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
this Agreement in accordance with Sections 13.2 or 13.3 above, and/or to terminate any other rights, options or arrangements
under this Agreement at any time thereafter for the same default or as a result of any additional defaults of the terms of this Agreement.
14. Obligations Upon Termination or Expiration.
- 14.1 Upon termination or expiration of this Agreement, all rights granted hereunder to Franchisee shall forthwith terminate, and:
- 14.1.1 Cease Operations. Franchisee shall immediately cease to operate the Restaurant, and shall not thereafter, directly or indirectly, represent to the public or hold Franchisee out as a present or former franchisee of 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. In particular, Franchisee shall cease to use all signs, advertising materials, displays, stationery, forms, and any other articles that display the Proprietary Marks, remove all such articles and/or permit Del Taco to enter the Restaurant and remove or permanently cover all signs or advertisements identifiable in any way with Del Taco's name or business, at Franchisee's expense.
- 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.
- 14.1.4 Pay Monies Owed; Liquidated Damages. Franchisee shall pay Del Taco all sums then due plus damages for the right to receive the Royalty Fees for the remaining term of this Agreement, together with any other damages suffered by Del Taco as a result of the default. The damages for royalties due during the remainder of the term of this Agreement shall equal the product of the average yearly amount of all fees paid or payments by Franchisee under Section 3 of this Agreement during the three years immediately preceding the termination (or such period as the Restaurant was open for business, if the Restaurant was not open for business during the entire three year period), multiplied by the number of years remaining in the term. The payments called for in this Section 14.1.4 are not a penalty. A precise calculation of the full extent of damages that Del Taco will incur if this Agreement terminates because Franchisee defaults cannot be reasonably determined. Nevertheless, the parties agree that the lump-sum payment provided under this Section 14.1.4 is reasonable in light of the damages for premature termination that may reasonably be expected to occur in such event. Franchisee shall also pay to Del Taco, in addition to any amounts then due and owing, all expenses incurred by Del Taco as a result of any default, including reasonable attorneys' fees, expenses, and costs, and interest on such attorneys' fees, expenses, and costs.
- 14.1.5 Return of Manuals and Other Materials. Franchisee shall immediately deliver to Del Taco the Manuals, plans and specifications, designs, records, data, samples, models, programs, handbooks and drawings relating to Del Taco's operations or business, and all other materials containing Confidential Information (including any copies thereof, even if such copies were made in violation of this Agreement), all of which are acknowledged to be Del Taco's property.
- 14.1.6 No Confusion. Franchisee agrees that, if it continues to operate or subsequently begins to operate any other business, Franchisee shall not use any reproduction, counterfeit copy, or colorable imitation of the Proprietary Marks, either in connection with such other business or the promotion
thereof, which is likely to cause confusion, mistake, or deception, or which is likely to dilute Del Taco's rights in and to the Proprietary Marks, and further agree not to utilize any designation of origin, description, trademark, service mark, or representation which suggests or represents a present or past association or connection with Del Taco, the System, or the Proprietary Marks.
14.1.7 Assign Leases; Modification of Premises. Del Taco shall have the right and option, but not the obligation, to acquire the Leases for the Restaurant, or otherwise acquire the right to occupy the premises. Del Taco may assign or delegate this right or option to any of Del Taco's affiliates or a third party designee, without notice to, or request for approval from, the landlord or lessor of the premises.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, upon termination or expiration of the Franchise Agreement, a franchisee must immediately cease operating the restaurant and cannot represent themselves as a current or former Del Taco franchisee. The franchisee must also immediately and permanently stop using any confidential methods, procedures, and techniques associated with the Del Taco system, including the "Del Taco" mark and all other proprietary marks, slogans, signs, symbols, and devices. This includes removing all signs, advertising materials, displays, stationery, forms, and any other articles that display the proprietary marks, or allowing Del Taco to remove or cover them at the franchisee's expense.
Furthermore, the franchisee is required to take necessary actions to cancel any assumed name or equivalent registration containing the "Del Taco" proprietary mark or any other service mark or trademark and provide Del Taco with satisfactory evidence of compliance within five days of termination or expiration. The franchisee must also pay Del Taco all outstanding sums, including damages for the right to receive royalty fees for the remaining term of the agreement, along with any other damages suffered by Del Taco due to the default. These payments are not considered a penalty, as a precise calculation of damages is difficult to determine.
Del Taco also has the option to purchase any or all of the restaurant's equipment or inventory within 30 days of termination or expiration, at the lesser of fair market value or the franchisee's book value, depreciated on a five-year straight-line basis. For equipment five or more years old, the fair market value is deemed to be 10% of the original cost. The franchisee must cooperate in determining the equipment's value and provide information regarding liens or amounts owed to third parties. Del Taco can offset any amounts due from the franchisee, including liquidated damages, from the purchase price. The transfer of equipment should occur within 60 days after termination, provided there are no delays caused by the franchisee's lender or lessor.
Finally, the franchisee is responsible for paying all damages, costs, interest, and expenses, including reasonable attorneys' fees, incurred by Del Taco in enforcing any provisions related to the obligations upon termination or expiration. All provisions of the Franchise Agreement that are designed to survive expiration or termination will remain in effect.