What happens to the Development Fee if the Del Taco Development Agreement is terminated?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
re immediately upon the required opening date for the last Restaurant set forth on the Development Schedule or the actual opening date for the last Restaurant, whichever first occurs, unless sooner terminated in accordance with the terms and conditions of this Agreement.
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- Time of Essence. Time is of the essence of this Agreement.
5. Fees. The Developer shall pay to Del Taco the following fees:
- (a) In consideration of the Development Rights granted in this Agreement, the Developer shall pay to Del Taco a fully non-refundable Development Fee of $35,000 for the first Restaurant scheduled for opening and $10,000 for each additional Restaurant scheduled for opening, payable upon execution and delivery by the Developer of this Agreement. As between Developer and Del Taco, Del Taco shall earn the Development Fee upon the execution of this Agreement and shall not have any obligation to refund any portion of the Development Fee.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the Development Fee is generally non-refundable. Specifically, Del Taco earns the Development Fee upon the execution of the Development Agreement. The document states that Del Taco has no obligation to refund any portion of the Development Fee once the agreement is in place.
However, the Development Fee can be credited towards the initial franchise fee under certain conditions. Upon the execution of a Franchise Agreement, Del Taco will credit $35,000 for the first restaurant and $10,000 for each subsequent restaurant from the Development Fee towards the initial franchise fee for each of those restaurants. This credit applies only when the developer executes a Franchise Agreement.
In the event of a Development Agreement termination, the franchisee should not expect a refund of the Development Fee. The franchisee acknowledges that once a Franchise Agreement for a restaurant is executed, there is no right to a refund of any portion of these fees. This policy underscores the importance of carefully evaluating the Development Agreement and the likelihood of fulfilling the development schedule before entering into the agreement.