What is the maximum amount of actual damages the Developer may recover from Del Taco?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
The actual damages that the Developer may recover shall not exceed the aggregate amount of development fees paid by the Developer to Del Taco since the occurrence of the act or omission giving rise to the claim for damages. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 21, ANY AND ALL CLAIMS AND ACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PARTIES' RELATIONSHIP, OR DEVELOPER'S OPERATIONS OF ANY RESTAURANTS, (INCLUDING ANY DEFENSES AND ANY CLAIMS OF SET-OFF OR RECOUPMENT), SHALL BE IRREVOCABLY BARRED UNLESS BROUGHT OR ASSERTED BEFORE THE EXPIRATION OF THE EARLIER OF (A) THE TIME PERIOD FOR BRINGING AN ACTION UNDER ANY APPLICABLE STATE OR FEDERAL STATUTE OF LIMITATIONS; (B) ONE (1) YEAR AFTER THE DATE UPON WHICH A PARTY DISCOVERED, OR SHOULD HAVE DISCOVERED, THE FACTS GIVING RISE TO AN ALLEGED CLAIM; OR (C) TWO (2) YEARS AFTER THE FIRST ACT OR OMISSION GIVING RISE TO AN ALLEGED CLAIM.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the maximum amount of actual damages that a Developer may recover from Del Taco is capped at the aggregate amount of development fees paid to Del Taco since the act or omission that led to the damage claim. This means that if a Developer sues Del Taco and wins, the total compensation they can receive in actual damages is limited to the sum of the development fees they've already paid.
This limitation on damages has significant implications for prospective Del Taco developers. It effectively restricts the potential financial recovery in case of disputes, regardless of the actual extent of the losses suffered. For instance, even if Del Taco's actions cause a Developer to lose significantly more than the development fees paid, the Developer's compensation is still capped at that fee amount. This could leave the Developer bearing a substantial financial burden.
It is also important to note that the Developer waives the right to punitive, exemplary, multiple, consequential, or lost profit damages. They are only able to recover actual damages, which are then capped at the aggregate development fees paid. This is a significant point to consider, as it limits the financial recourse available to the Developer in the event of a dispute with Del Taco. Prospective developers should carefully consider this limitation and its potential impact on their investment and business operations.
This type of limitation on damages is not uncommon in franchise agreements, as franchisors often seek to manage their potential financial exposure. However, the specific terms and limitations can vary significantly between different franchise systems. Therefore, prospective Del Taco developers should carefully review this provision and seek legal counsel to fully understand its implications before entering into a Development Agreement.