Can Del Taco limit the number of approved suppliers a franchisee may deal with?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything to the contrary contained in this Agreement, Franchisee acknowledges and agrees that, at Del Taco's sole option, Del Taco may establish one or more strategic alliances or preferred vendor programs with one or more nationally or regionally-known suppliers who are willing to supply all or some Restaurants with some or all of the products and/or services that Del Taco requires for use and/or sale in the development and/or operation of Restaurants.
In this event, Del Taco may limit the number of approved suppliers with whom Franchisee may deal, designate sources that Franchisee must use for some or all products and other products and services, and/or refuse any of Franchisee's requests if Del Taco believes that this action is in the best interests of the System or the franchised network of Restaurants.
Del Taco shall have unlimited discretion to approve or disapprove of the suppliers who may be permitted to sell products to Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, Del Taco has the right to limit the number of approved suppliers a franchisee may use. Del Taco may establish strategic alliances or preferred vendor programs with national or regional suppliers. If this occurs, Del Taco can limit the suppliers a franchisee can deal with, designate mandatory sources for products and services, or deny a franchisee's requests if Del Taco believes it benefits the Del Taco system.
Del Taco retains complete discretion in approving or disapproving suppliers for franchisees. If a franchisee wants to use an unapproved supplier, they must submit a written request to Del Taco for approval. Franchisees cannot purchase from unapproved suppliers unless Del Taco provides written approval. Del Taco can inspect the supplier's facilities and require samples for testing, with the franchisee or supplier bearing the costs.
Del Taco can also require suppliers to meet other requirements, including paying inspection fees or other payments to Del Taco for services rendered to the suppliers. Del Taco can periodically reinspect approved suppliers and revoke approval if they fail to meet current criteria. This allows Del Taco to maintain quality control and standardization across its franchise system.
This policy is fairly common in franchising, as franchisors want to ensure consistent product quality and protect their brand reputation. However, it could limit a franchisee's ability to negotiate better prices or source unique products locally. Prospective franchisees should discuss supplier selection and approval processes with existing franchisees during their due diligence to understand the potential impact on their business.