Does the Del Taco franchisee's indemnification obligation survive the termination of the franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
All provisions of this Agreement which, by their terms or intent, are designed to survive the expiration or termination of this Agreement, shall so survive the expiration and/or termination of this Agreement.
29. Representations, Warranties and Acknowledgments.
- 29.1 Franchisee represents, warrants and acknowledges to Del Taco as follows:
- 29.1.1 Modification of Offers. Franchisee understands that present and future franchisees of Del Taco may operate under different forms of agreements and, consequently, the obligations and rights of the parties to those agreements may differ materially from the obligations and rights contained in this Agreement. Franchisee also acknowledges and agrees that Del Taco may modify the offer of Del Taco franchises to other franchisees in any manner and at any time, which offers and agreements have or may have terms, conditions, and obligations that may differ from the terms, conditions, and obligations in this Agreement.
- 29.1.2 Development Agreement Terms. Franchisee understands that a franchisee who is a party to a Del Taco Development Agreement may enjoy significantly more favorable terms and conditions under its Del Taco Franchise Agreement than the terms and conditions contained in this Agreement.
- 29.1.3 No Other Obligations. Each party represents and warrants to the others that his/her/its execution of this Agreement and all exhibits and addenda hereto do not violate or breach any other agreement, contract or covenant to which such party is bound, and further represents and warrants to the other parties that there are no other agreements, court orders, or any other legal obligations that would preclude or in any manner restrict such party from: (a) negotiating and entering into this Agreement; (b) exercising its rights under this Agreement; and/or (c) fulfilling its responsibilities under this Agreement.
- 29.1.4 Restaurant Location. Franchisee acknowledges having sole and complete responsibility for the choice of the location of the Restaurant; and that Del Taco has not (and shall not be deemed to have, even by Del Taco's approval of the location) given any representation, promise, or guarantee of Franchisee's success at the location.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the franchise agreement contains provisions designed to survive the termination or expiration of the agreement. Specifically, all provisions of the agreement which, by their terms or intent, are designed to survive the expiration or termination of the agreement, shall survive the expiration and/or termination of the agreement.
One such provision is the indemnification clause. The Del Taco franchise agreement states that the franchisee must indemnify and hold Del Taco and its affiliates harmless against claims, obligations, and damages arising directly or indirectly from the agreement, the restaurant, the franchisee's operation, actions, inactions, or breach of the agreement. This includes covering legal costs and attorney's fees, unless the claims are solely caused by Del Taco's gross negligence or willful misconduct as determined by a court or arbitrator.
In practical terms, this means that even after the franchise agreement ends, a former Del Taco franchisee could still be responsible for covering costs and damages related to their past operation of the franchise. This could include legal claims, debts, or other obligations that arose during the term of the agreement. Franchisees should be aware of this long-term liability and ensure they maintain adequate insurance coverage and operate their business responsibly to minimize potential risks. This is a fairly standard practice in franchising, as franchisors seek to protect themselves from liabilities arising from the franchisee's conduct of business, even after the franchise relationship has ended.