What is the maximum Royalty Fee for a Del Taco franchise?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
The Royalty Fee (which is currently 5% of Net Sales) will be reduced to: (i) 1% of Net Sales for the first year of a Restaurant's operations; (ii) 2% of Net Sales for the second year of a Restaurant's operations; (iii) 3% of Net Sales for the third year of a Restaurant's operations; (iv) 4% of Net Sales for the fourth year of a Restaurant's operations; and (v) 5% of Net Sales for all subsequent years.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to the 2025 Del Taco FDD, the standard royalty fee is 5% of Net Sales. However, Del Taco offers a Development Incentive Program that can reduce the royalty fee for a period of time.
Under the Development Incentive Program, for the first two restaurants opened under a Development Agreement, the royalty fee is reduced according to the following schedule: 1% of Net Sales for the first year, 2% for the second year, 3% for the third year, 4% for the fourth year, and 5% for all subsequent years. This incentive is available only if the franchisee and its affiliates are fully compliant with the terms of the Development Agreement, Franchise Agreement, and any other agreements with Del Taco.
It's important to note that to qualify for these development incentives, the franchisee must adhere to the development schedule outlined in the Development Agreement. If the franchisee breaches either the Development Agreement or the Franchise Agreement, they will be required to immediately pay Del Taco the amount of any reduction in the Initial Franchise Fees or Royalty Fees they have received. This condition underscores the importance of meeting development obligations to maintain the reduced royalty fee structure.