If a proposed Del Taco site impacts an existing franchisee, what payment might be required?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
As a condition of Del Taco's review of a proposed site, Del Taco may require Franchisee to pay for (or reimburse Del Taco for the costs of) a trade area survey analysis if the proposed site is within certain distance of any existing Restaurant as specified in Del Taco's thencurrent business impact policy.
Depending on the results of any such trade area survey analysis, Del Taco may (a) reject a proposed site, or (b) as a condition for Del Taco's approval of the proposed site, (i) require Franchisee to make a business impact payment to any affected franchisee(s) in accordance with Del Taco's then-current business impact policy, or (ii) notwithstanding any prior agreement to the contrary, reduce or withhold any development incentives to offset projected impacts upon any existing company-owned Restaurants in accordance with the then-current business impact policy.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, as a condition for approving a proposed site, Del Taco may require a franchisee to make a business impact payment to any affected franchisees. This payment is determined in accordance with Del Taco's then-current business impact policy. The need for this payment arises if the proposed site is within a certain distance of an existing Del Taco restaurant.
To determine if a business impact payment is necessary, Del Taco may require the franchisee to pay for a trade area survey analysis. The results of this analysis will influence Del Taco's decision to either reject the proposed site or approve it with the condition of a business impact payment. This payment is intended to compensate existing franchisees who may experience negative impacts due to the new location.
Alternatively, if the new site impacts a company-owned Del Taco restaurant, Del Taco may reduce or withhold development incentives to offset projected impacts, again based on their current business impact policy. This policy ensures that existing restaurants, whether franchised or company-owned, are considered when new locations are being evaluated and approved.
Prospective franchisees should carefully review Del Taco's business impact policy to understand the specific distances that trigger a trade area survey, how the business impact payment is calculated, and the criteria used to determine the impact on existing restaurants. Understanding these factors is crucial for assessing the potential costs and obligations associated with opening a new Del Taco franchise.