What happens if a Del Taco franchisee fails to obtain site approval?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
conditions set forth in this Agreement, Del Taco hereby grants to Franchisee the right, and Franchisee accepts and undertakes the obligation, to: (a) operate one (1) Del Taco Restaurant under the System (the "Restaurant"); (b) to use, only in connection with the
Restaurant, the Proprietary Marks and the System, as they may be changed, improved, or further developed from time to time by Del Taco; and (c) and to do so only at or from a physical premises located within the Protected Area (defined below in Section 1.2) at the location specified in Exhibit A. If, at the time of execution of this Agreement, a location for the Restaurant has not been obtained by Franchisee and approved by Del Taco, Franchisee shall lease, sublease, or acquire a site for the Restaurant, subject to Del Taco's written consent in accordance with the Site Selection Addendum attached as Exhibit B (the "Site Selection Addendum"). Franchisee shall not relocate the Restaurant without Del Taco's prior written consent. Del Taco shall grant or withhold consent of the relocation of the Restaurant under this Section 1.1. In connection with Del Taco's consent to the location, Franchisee shall execute, and cause the landlord to execute, the Addendum to Lease appended hereto as Exhibit G. Franchisee acknowledges and agrees that Del Taco's consent to Franchisee's proposed location, under this Section 1.1 or pursuant to the Site Selection Addendum, does not constitute any assurance, representation, or warranty of Del Taco of any kind.
- 1.2 Protected Area. Except as otherwise described in this Agreement, for so long as Franchisee is in full compliance with this Agreement, Del Taco will not, during the term of this Agreement, operate or license others to operate a Del Taco Restaurant at a physical premises located within the Protected Area. "Protected Area" shall mean the area within a one (1) mile radius around the Restaurant, with the exception of any outlet that is open, under construction or site approved or that is defined in this Agreement as an Alternative Point of Distribution (defined below) that is developed, constructed, operated, merchandised, sold, licensed and/or franchised to others by Del Taco to sell Menu Items, products, and services to the public within the Protected Area, as may be revised in accordance with Section 1.2.5 hereof. "Alternative Point(s) of Distribution" shall mean any outlet described in Section 1.2.2 of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
Based on the 2025 Del Taco Franchise Disclosure Document, if, at the time of the execution of the Franchise Agreement, a location for the Restaurant has not been obtained by the franchisee and approved by Del Taco, the franchisee is required to lease, sublease, or acquire a site for the Restaurant, subject to Del Taco's written consent in accordance with the Site Selection Addendum attached as Exhibit B. The franchisee cannot relocate the Restaurant without Del Taco's prior written consent. Del Taco will either grant or withhold consent for the relocation of the Restaurant. In connection with Del Taco's consent to the location, the franchisee must execute, and ensure that the landlord executes, the Addendum to Lease appended as Exhibit G. Del Taco's consent to the franchisee's proposed location does not constitute any assurance, representation, or warranty of Del Taco of any kind.
Furthermore, the franchisee must open the Restaurant at the later of (a) one hundred eighty (180) days from the Effective Date, or (b) if upon execution of this Agreement, a location for the Restaurant has not been obtained by Franchisee and approved by Del Taco, one hundred eighty (180) days from the later of (i) Del Taco's approval of the location for the Restaurant pursuant to the Site Selection Addendum, or (ii) Franchisee's access to the leased premises as permitted by the lessor under the lease.
Failure to secure site approval can lead to delays in opening the Del Taco restaurant, potentially impacting the franchisee's ability to meet the stipulated opening timelines. Since the franchisee cannot operate without an approved location, this requirement is critical. The franchisee bears the responsibility of finding a suitable site and ensuring compliance with Del Taco's standards and legal requirements. The franchisee should maintain open communication with Del Taco during the site selection process to mitigate the risk of disapproval and associated delays.