Does Del Taco guarantee a franchisee's notes?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
As an inducement to Del Taco, LLC ("Del Taco" or "Franchisor") to execute the Del Taco Franchise Agreement between Del Taco and ("Franchisee"), dated , 20 (the "Agreement"), the undersigned jointly and severally, hereby unconditionally guarantee to Del Taco and its successors and assigns that all of Franchisee's monetary and other obligations under the Agreement will be punctually paid and performed.
Upon demand by Del Taco, the undersigned each hereby jointly and severally agree to immediately make each payment required of Franchisee under the Agreement and waive any right to require Del Taco to: (a) proceed against Franchisee for any payment required under the Agreement; (b) proceed against or exhaust any security from Franchisee; (c) pursue or exhaust any remedy, including any legal or equitable relief, against Franchisee; or (d) give notice of demand for payment by Franchisee. Without affecting the obligations of the undersigned under this Guarantee, Del Taco may, without notice to the undersigned, extend, modify, or release any indebtedness or obligation of Franchisee, or settle, adjust, or compromise any claims against Franchisee, and the undersigned each hereby jointly and severally waive notice of same and agree to remain and be bound by any and all such amendments and changes to the Agreement.
Source: Item 10 — FINANCING (FDD page 31)
What This Means (2025 FDD)
Based on the 2025 Del Taco Franchise Disclosure Document, Del Taco does not guarantee a franchisee's notes. However, under the 'Guarantee, Indemnification, and Acknowledgment' exhibit, the franchisee's monetary and other obligations under the agreement are unconditionally guaranteed to Del Taco by the undersigned, ensuring all payments and responsibilities are met. This guarantee extends to Del Taco's successors and assigns.
Specifically, the guarantor(s) agree to immediately make any payment required of the franchisee upon demand by Del Taco, waiving any right to require Del Taco to first pursue the franchisee, exhaust any security, or provide notice of demand for payment. This ensures that Del Taco receives prompt payment without having to navigate legal proceedings against the franchisee.
Furthermore, Del Taco can extend, modify, or release any indebtedness or obligation of the franchisee without notifying the guarantor, who remains bound by any such changes to the agreement. This provision protects Del Taco's interests by ensuring financial obligations are met, although it places a significant responsibility on the guarantor, who should be fully aware of the potential financial risks and liabilities involved in guaranteeing the franchisee's obligations.