If a Del Taco franchisee operates as a legal entity, what is required of all owners?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
proval by Del Taco, and satisfactory completion of Del Taco's training programs, who shall be responsible for oversight and management of the day-to-day shift operations and personnel at the Restaurant under the supervision of the Restaurant Manager and Operating Principal (the "Shift Managers").
- 5.28 Personal Guarantee. Concurrent with its execution of this Agreement, if Franchisee is a business entity, the Operating Principal, along with each owner shall execute the Guarantee, Indemnification and Acknowledgement in the form attached to this Agreement as Exhibit E, provided, however, that no guarantee shall be required from a person who acquires Franchisee's securities (other than a controlling interest) if and after Franchisee becomes registered under the Securities Exchange Act of 1934.
- 5.29 System Modifications. Franchisee acknowledges and agrees that from time to time hereafter Del Taco may change or modify the System as Del Taco deems appropriate, including to reflect the changing market and/or to meet new and changing consumer demands, and that variations and additions to the System may be required from time to time to preserve and enhance the public image of the System and operations of Del Taco Restaurants.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 42)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, if a franchisee operates as a business entity, all owners are required to execute a Guarantee, Indemnification, and Acknowledgement, as detailed in Exhibit E of the franchise agreement. However, this guarantee is not required from individuals who acquire the franchisee's securities (excluding a controlling interest) after the franchisee becomes registered under the Securities Exchange Act of 1934.
Furthermore, all owners, along with their ownership interests, must be identified in Exhibit D of the franchise agreement. Any changes in ownership must be reported to Del Taco in advance and in writing, and Exhibit D must be updated to reflect these changes. This ensures Del Taco is always aware of the current ownership structure of its franchisees.
In the event of a transfer of ownership, the new owners must meet Del Taco's standards for education, management, and business acumen. They must also demonstrate good moral character, business reputation, and credit rating, as well as the aptitude and financial resources necessary to operate the Del Taco restaurant. Additionally, the Operating Principal and other owners or employees specified by Del Taco must successfully complete the initial training program. These conditions ensure that new owners are qualified and capable of maintaining Del Taco's standards.