Does a Del Taco franchisee's breach of contract constitute a breach of the Franchise Agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee's breach of this Contract resulting in its termination for cause pursuant to Section 7.b) hereof shall constitute a breach of the Franchise Agreement, for which Company may, among other things, immediately terminate the Franchise Agreement without providing Franchisee an opportunity to cure.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, a franchisee's breach of the separate contract for the Platform may constitute a breach of the Franchise Agreement. Specifically, if the franchisee's breach of the Platform contract results in its termination for cause, Del Taco can consider this a breach of the Franchise Agreement.
This "cross default" clause means that Del Taco has the right to immediately terminate the Franchise Agreement without offering the franchisee an opportunity to fix the problem. This is in addition to any other actions Del Taco might take.
This provision creates a significant risk for franchisees. It highlights the importance of complying with all contractual obligations, not just those directly within the Franchise Agreement itself. Franchisees should carefully review all related agreements and understand how a breach in one could trigger severe consequences for their core franchise rights.