Can the protected area for a Del Taco franchise be different or modified upon renewal?

According to Del Taco's 2025 Franchise Disclosure Document, the protected area for a franchise can indeed be different or modified upon renewal. Specifically, the FDD states that the terms, conditions, and provisions of the renewal franchise agreement may differ substantially from the initial agreement, including a different or modified protected area. This means that when a franchisee renews their agreement, the geographic area in which Del Taco will not operate or license another Del Taco restaurant could change.

This has significant implications for a prospective franchisee. While the initial franchise agreement defines a specific protected area, there is no guarantee that this area will remain the same upon renewal. Del Taco could reduce the size of the protected area, potentially allowing other Del Taco locations to open closer to the franchisee's restaurant. This could increase competition and impact the franchisee's revenue.

Furthermore, the FDD highlights that the franchisee must execute Del Taco's then-current form of franchise agreement, which supersedes the original agreement in all respects except for the renewal provisions of the new franchise agreement. This underscores the importance of carefully reviewing the renewal agreement to understand any changes to the protected area and other key terms. Franchisees should be prepared for the possibility of less favorable terms upon renewal and factor this into their long-term business planning.

In addition to a potentially modified protected area, the 2025 FDD also indicates that other terms and conditions may change upon renewal, such as a higher percentage royalty fee and advertising contribution or expenditure. Franchisees must also meet several conditions to qualify for renewal, including presenting evidence of their right to remain in possession of the premises, refurbishing the restaurant to current standards, satisfying all monetary obligations, and executing a general release of claims against Del Taco. These factors collectively emphasize the need for franchisees to maintain a strong financial and operational track record to secure a renewal agreement with favorable terms.