Can Del Taco immediately terminate the Franchise Agreement if the franchisee's contract is terminated for cause?

According to Del Taco's 2025 Franchise Disclosure Document, a franchisee's breach of contract that leads to its termination for cause can trigger the immediate termination of the Franchise Agreement by Del Taco. Specifically, if the franchisee's contract is terminated for cause, Del Taco has the right to immediately terminate the Franchise Agreement without offering an opportunity to cure the breach.

This clause creates a significant risk for franchisees, as a breach of contract, as determined by Del Taco, can lead to a swift end to the franchise agreement. Franchisees must, therefore, ensure strict compliance with all contractual obligations to avoid such a situation. This cross-default provision is not uncommon in franchising, as franchisors often want to protect their brand and system standards by quickly removing non-compliant franchisees.

It is important for prospective Del Taco franchisees to fully understand the implications of this clause and to seek legal counsel to assess the risks involved. Franchisees should also strive to maintain open communication with Del Taco to address any potential issues before they escalate into breaches of contract. Understanding what constitutes a 'material breach' is crucial, as this is the trigger for immediate termination.