Does Del Taco guarantee a franchisee's other obligations?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
The undersigned each hereby jointly and severally agree to defend, indemnify and hold Del Taco harmless against any and all losses, damages, liabilities, costs, and expenses (including, but not limited to, reasonable attorney's fees, reasonable costs of financial and other investigation, court costs, and fees and expenses) resulting from, consisting of, or arising out of or in connection with any failure by Franchisee to perform any obligation of Franchisee under the Agreement, any amendment thereto, or any other agreement executed by Franchisee referred to therein.
Franchisee shall, to the fullest extent permissible under applicable law, indemnify and hold Del Taco and its affiliates, and each of Del Taco's respective officers, directors, employees, and agents harmless against any and all claims, obligations, and damages arising directly or indirectly from, as a result of, or in connection with this Agreement, the Restaurant, Franchisee's operation of the Restaurant, Franchisee and its employees' actions and inaction, or Franchisee's breach of this Agreement, including those alleged to be caused by Del Taco's negligence, as well as the costs, including attorneys' fees, costs, and expenses (and interest on such fees, costs, and expenses), of defending against them, unless (and then only to the extent that) the claims, obligations, and damages are determined to be caused solely by Del Taco's gross negligence or willful misconduct according to a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction.
It is understood and agreed that nothing in this Agreement authorizes Franchisee to make any contract, agreement, warranty, or representation on Del Taco's behalf, or to incur any debt or other obligation in Del Taco's name; and that Del Taco shall in no event assume liability for, or be deemed liable hereunder as a result of, any such action; nor shall Del Taco be liable by reason of any act or omission by Franchisee in Franchisee's conduct of the Restaurant or for any claim or judgment arising therefrom against Franchisee or Del Taco.
In the event Franchisee fails to promptly pay one or more suppliers as required, Del Taco may, but is not required to, pay such supplier(s) on behalf of Franchisee, and Franchisee shall promptly reimburse Del Taco for such payment following notice from Del
Source: Item 10 — FINANCING (FDD page 31)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, franchisees are required to indemnify Del Taco against any claims, obligations, and damages arising from the franchise agreement or the operation of the restaurant. Specifically, the franchisee must defend, indemnify, and hold Del Taco harmless against any losses, damages, liabilities, costs, and expenses, including attorney's fees, resulting from the franchisee's failure to perform their obligations under the agreement. This means that if a franchisee breaches the franchise agreement, they are responsible for covering Del Taco's associated costs and losses.
Furthermore, the franchisee acknowledges that Del Taco will not be held liable for any actions or omissions by the franchisee in the operation of the restaurant. The franchisee is considered an independent contractor and is not authorized to make any contracts or incur any debt on Del Taco's behalf. This reinforces the separation between the franchisor and franchisee, placing the responsibility for the restaurant's operations and any resulting liabilities squarely on the franchisee.
In the event that the franchisee fails to promptly pay suppliers, Del Taco has the option, but not the obligation, to pay the suppliers on behalf of the franchisee. If Del Taco chooses to do so, the franchisee is required to promptly reimburse Del Taco for the payment. This clause provides Del Taco with a mechanism to ensure suppliers are paid, but it does not obligate Del Taco to act as a guarantor for the franchisee's debts. Instead, it serves as a conditional measure to protect the supply chain and maintain the brand's reputation, with the franchisee ultimately responsible for their financial obligations.