What happens if a Del Taco franchisee breaches the contract, resulting in termination for cause?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
DEL TACO AND PERMITTING DEL TACO TO INTERVIEW FRANCHISEE'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS. DEL TACO SHALL HAVE NO FIDUCIARY OBLIGATION TO FRANCHISEE AND SHALL HAVE THE RIGHT TO EXERCISE ITS BUSINESS JUDGEMENT, AS FURTHER DESCRIBED IN SECTION 13 BELOW, REGARDING THE EXERCISE OF ITS RIGHTS DESCRIBED IN THIS SECTION 6.
7. TERM AND TERMINATION.
- a) Term. This Agreement shall commence on the Effective Date and continue until terminated in accordance with this Section 7. Notwithstanding the above, this Agreement shall terminate immediately upon termination or expiration of (i) the Franchise Agreement, (ii) the MSA, or (iii) Del Taco's right to use the Platform, or (iv) Del Taco's right to designate Franchisee as an "Affiliate" pursuant to the MSA for Franchisee's use of the Platform.
- b) Termination for Cause. The Company shall have the right to terminate this Contract or Franchisee's participation in the Platform immediately for a material breach of this Contract, provided such material breach is not cured within thirty (30) days after written notice of the breach or such material breach is incurable. Termination shall not constitute an election of remedies.
- c) Termination for Convenience. The Company may terminate this Contract by giving sixty (60) days' written notice to Franchisee. Franchisee may terminate the Contract by giving one hundred fifty (150) days' written notice to C. In the event the Company issues a sixty (60) day written notice of termination and prior to the expiration of the 60th day the Company becomes aware of facts indicating Franchisee breached these terms and conditions, the Company may accelerate the effective date of the termination and exercise its right to terminate this Contract immediately.
- d) Franchisee's Requirements upon Termination. In the event of a termination under this Section for any reason, Franchisee shall:
- i. Immediately cease to use or access the Platform.
- ii. Remain liable for all obligations to Ceridian occurring prior to the termination and resulting from the termination.
- iii. Return to Ceridian, within five (5) days of termination, any and all property of Ceridian in Franchisee's possession or control.
- iv. Comply with all its post-termination obligations of the Program Usage Agreement.
- e) Cross Default. 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.
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- NO JOINT EMPLOYMENT. Franchisee is solely responsible for all employment decisions and functions of the Restaurant including those related to hiring, firing, training, compliance with wage and hour requirements, personnel policies, scheduling, benefits, recordkeeping, supervision, and discipline of employees, regardless of Franchisee's use of the Platform or whether Franchisee receives advice from Del Taco on these subjects.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, if a franchisee materially breaches the Platform Usage Agreement, Del Taco has the right to terminate the franchisee's participation in the Platform immediately. However, the franchisee typically has thirty days after written notice to cure the breach, unless the breach is incurable. Termination does not prevent Del Taco from pursuing other remedies. Furthermore, a franchisee's breach of the Platform Usage Agreement that results in its termination for cause also constitutes a breach of the Franchise Agreement, which may allow Del Taco to immediately terminate the Franchise Agreement without giving the franchisee an opportunity to cure the breach.
Upon termination, the franchisee must immediately stop using or accessing the Platform. The franchisee remains responsible for all obligations to Ceridian (the Platform provider) that occurred before the termination and result from the termination. The franchisee must return any of Ceridian's property within five days of termination and comply with all post-termination obligations of the Program Usage Agreement.
Additionally, if the Licensee (franchisee) fails to comply with the terms of the Software and Documentation Agreement, including post-termination obligations, Del Taco may seek injunctive relief, as failure to comply is likely to cause irreparable harm to Del Taco. Upon termination of the Software and Documentation Agreement, the franchisee must cease using the Software and Documentation, return all copies, delete all copies from computer memory, and destroy all copies that incorporate Confidential Information. Del Taco can enter the Licensed Restaurants to repossess and remove the Software, Documentation, and any other Confidential Information. The franchisee must certify within 7 days of termination that all copies of the Software and Documentation have been returned, deleted, or destroyed.