What is the prohibited action related to operating the Del Taco restaurant without Del Taco's consent?

According to Del Taco's 2025 Franchise Disclosure Document, a franchisee is prohibited from transferring, pledging, or otherwise encumbering the franchise agreement, assets of the restaurant, leases, or any ownership interest in the franchise without Del Taco's prior written consent. This requirement ensures that Del Taco maintains control over who operates its franchises and protects the brand's integrity.

This restriction has significant implications for a prospective franchisee. It means that the franchisee cannot sell the business, take out loans using the restaurant as collateral, or change the ownership structure without first obtaining Del Taco's approval. This approval process allows Del Taco to vet potential new owners or partners to ensure they meet the company's standards for business skill, financial capacity, and personal character.

Del Taco imposes these restrictions because the franchise agreement is granted in reliance on the franchisee's specific qualifications. By requiring consent for transfers and encumbrances, Del Taco aims to maintain a consistent level of quality and operational standards across all its franchise locations. This is a common practice in franchising, as franchisors need to protect their brand and ensure that all franchisees are capable of upholding the brand's reputation.

A prospective franchisee should carefully consider these restrictions and understand the process for obtaining Del Taco's consent before entering into a franchise agreement. It is important to have a clear understanding of the conditions under which a transfer or change in ownership may be approved, as well as any potential fees or requirements associated with the approval process. This will help avoid any misunderstandings or disputes in the future.