What information regarding changes in ownership must be provided to Del Taco, and when?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
ars of financial statements and monthly cash reports, the lease for the Restaurant premises, material contracts, and such other information as may be specified by Del Taco.
- 12.4.12 The transferor must acknowledge and agree that the transferor shall remain bound by the covenants contained in Section 10 above.
- 12.5 Transfers to Entities for the Convenience of Ownership. If Franchisee desires to transfer all of Franchisee's interest in this Agreement, or if all of Franchisee's owners desire to transfer all of their ownership interests in Franchisee, to a corporation, limited liability company, or other entity, solely for the convenience of ownership and/or for tax or estate planning reasons, Del Taco shall not unreasonably withhold Del Taco's consent to such transfer, and Del Taco shall not require that Franchisee comply with the provisions and conditions of Section 12.4 or 12.6, if Franchisee complies with all of the following conditions:
- 12.5.1 Franchisee shall provide written notice to Del Taco not less than thirty (30) days prior to the date of the proposed transfer, and shall provide Del Taco with such documents and information as Del Taco may request in support of Franchisee's request, which may include, among other things, entity formation and good standing certifications, evidence of insurance in the name of the new franchisee entity, and bank information for the new franchisee entity.
- 12.5.2 Franchisee and Franchisee's owners shall own all of the outstanding equity interests in the new franchisee entity, and shall own the same percentage ownership interests in the new franchisee entity as they own in Franchisee, and if Franchisee is an individual, Franchisee shall own 100% of the outstanding voting equity interests in the new franchisee entity.
- 12.5.3 All owners of the new franchisee entity shall execute a Guarantee in the form attached as Exhibit E hereto.
- 12.5.4 Franchisee and Franchisee's owners shall comply with the provisions of Sections 12.4.1, 12.4.2, 12.4.6, 12.4.7, and 12.4.11 of this Agreement, and the new entity and its owners shall comply with Sections 5.27 and 5.28 of this Agreement.
- 12.5.5 Franchisee and Franchisee's owners shall execute such transfer documents, agreements and other materials as Del Taco may require.
12.6 Right of First Refusal.
- 12.6.1 If Franchisee or any owner desires to accept any bona fide offer from a third party to purchase Franchisee, all or substantially all of the assets of the Restaurant, or any direct or indirect interest in Franchisee, Franchise or such owner shall promptly notify Del Taco of such offer and shall provide such information and documentation relating to the offer as Del Taco may require. Del Taco shall have the right and option, exercisable within thirty (30) days after receipt of all such information, to send written notice to the seller that Del Taco intends to purchase the seller's interest on the same terms and conditions offered by the third party. If Del Taco elects to purchase the seller's interest, the closing on such purchase shall occur within sixty (60) days from the date of notice to the seller of the election to purchase by Del Taco.
- 12.6.2 Any material change in the terms of the bona fide offer prior to closing shall constitute a new offer subject to the same rights of first refusal by Del Taco as in the case of the third party's initial offer.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, if a franchisee desires to transfer their interest in the Franchise Agreement to another entity for convenience of ownership or for tax or estate planning reasons, they must provide written notice to Del Taco at least thirty (30) days before the proposed transfer date. This notice must include documents and information supporting the request, such as entity formation and good standing certifications, evidence of insurance under the new franchisee entity's name, and bank information for the new entity.
Additionally, if a franchisee or any owner desires to accept a bona fide offer from a third party to purchase the franchisee, the restaurant's assets, or any direct or indirect interest in the franchisee, they must promptly notify Del Taco of the offer. This notification must include all information and documentation related to the offer that Del Taco may require. Del Taco then has the option to purchase the seller's interest on the same terms and conditions offered by the third party, exercisable within thirty (30) days after receiving all required information.
Furthermore, the franchisee must certify to Del Taco that the transferee has been provided with true, complete, and accurate copies of the franchisee's financial information and documents regarding the restaurant's operation. This includes the trailing two years of financial statements and monthly cash reports, the restaurant premises lease, material contracts, and any other information specified by Del Taco. If the franchisee is a limited liability company, they must provide Del Taco with a copy of its articles of organization and operating agreement, along with any amendments, and a current list of all members and managers, updated to reflect any ownership changes permitted under the agreement.