Does the Del Taco franchisee receive compensation for ideas or concepts related to the restaurant that they develop and disclose to Del Taco?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to disclose to Del Taco all ideas, concepts, methods, techniques and products conceived or developed by Franchisee, its affiliates, owners, agents, or employees during the term of this Agreement relating to the development and/or operation of the Restaurant, and Del Taco shall be the sole owner of any such ideas, concepts, methods, techniques and products, which shall be deemed a work made for hire (or to the extent the work may not be deemed a "work made for hire" under applicable law, Franchisee hereby irrevocably assigns to Del Taco, for no additional consideration, all right, title and interest in and to any patents, trademarks, copyrights, trade secrets and any other proprietary rights), and there are no restrictions on use, and no compensation shall be due to Franchisee.
Franchisee agrees to cooperate fully in obtaining any patents, trademarks or copyrights.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, franchisees are required to disclose any ideas, concepts, methods, techniques, and products they develop related to the restaurant's operation to Del Taco. The agreement stipulates that Del Taco will be the sole owner of these developments.
This means that any innovations or improvements a franchisee comes up with during the term of their agreement, whether related to operational methods or new products, automatically become the property of Del Taco. The franchisee essentially assigns all rights, titles, and interests in these developments to Del Taco.
The agreement explicitly states that franchisees will not receive any compensation for these ideas or concepts. This is a significant point for prospective franchisees to consider, as it means they will not directly benefit financially from any successful innovations they introduce to the Del Taco system. Del Taco has full discretion over the use of franchisee-developed ideas with no obligation to provide royalties or other payments.
This type of clause is not uncommon in franchising, as franchisors often seek to maintain uniformity and control over their brand and system. However, it underscores the importance of understanding the full scope of the franchise agreement and the allocation of intellectual property rights.