What are my obligations upon termination or non-renewal of the Del Taco Development Agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
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THE FRANCHISE RELATIONSHIP
| Provision | Section in the Agreement | Summary | |
|---|---|---|---|
| a. Term of the franchise | 2.1 | The initial term expires 20 years after the date the Restaurant opens. |
| Provision | Section in the Agreement | Summary |
|---|---|---|
| n. Our right of first refusal to acquire your business | 12.6 | We have an option for 30 days to purchase upon same terms and conditions offered to the third party. |
| o. Our option to purchase your business | 12.6 | We have an option to purchase your business upon the termination or expiration of your Franchise Agreement. |
| p. Your death or disability | 12.7 and 12.8 | We will not withhold consent unreasonably to a transfer to a third party within 6 months, provided the transferee meets our general conditions of transfer. |
| q. Non-competition covenants during the term of the franchise | 10.5 | You cannot use the Del Taco System or any other names, marks, systems, logotypes, symbols or foodstuffs provided by us or an approved supplier in connection with another Restaurant; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, your obligations upon termination or expiration of the franchise include abiding by non-competition covenants. Specifically, for a period of two years after the termination or expiration of your franchise, you cannot operate a competitive business within two miles of your original Del Taco location or any other existing Del Taco Restaurant. This is subject to applicable state laws, which may modify the enforcement or scope of these covenants. A competitive business is defined as a restaurant or food service business that offers one or more Mexican or similar style menu items and is operated in a quick service, fast food, or fast casual format.
Del Taco also has the option to purchase your business upon the termination or expiration of your Franchise Agreement. This means that Del Taco has the right, but not the obligation, to buy your franchise location if the agreement ends. The specific terms of this purchase option would be detailed in the Franchise Agreement itself.
Prospective franchisees should be aware that these post-termination obligations are common in franchising to protect the brand and market share of Del Taco. It is important to carefully review the specific terms in the Franchise Agreement and understand how state laws may affect these provisions. Consulting with a legal professional is advisable to fully understand the implications of these obligations.