Does Del Taco provide any resources for franchisees to find financing?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee as shown in Exhibit D.
- 12.3.5 Franchisee shall not transfer or assign the lease for the Restaurant, or permit a default or surrender of the lease that will or may cause the Restaurant to be owned, leased, or operated by, any person or entity that will not operate a Del Taco Restaurant, without Del Taco's prior written consent.
- 12.4 Conditions for Approval. Del Taco shall not unreasonably withhold any consent required by Section 12.3.4 above; provided, that if Franchisee proposes to transfer its obligations hereunder or any interest in all or substantially all of the assets of the Restaurant, or if Franchisee or an owner proposes to transfer any direct or indirect interest in Franchisee, or if Franchisee or any owner proposes to undertake any transfer that is subject to Section 12.3, Del Taco shall have the right to require, among other things, any or all of the following as conditions of Del Taco's approval:
- 12.4.1 Franchisee shall comply with Del Taco's then-current transfer policies. Franchisee and the proposed transferee shall provide Del Taco with all information and documents requested by Del Taco for its evaluation of the proposed transfer, transaction, and transferee, including the business and financial terms of the proposed transaction including the leases and/or any assignments, renewal or extension of the leases and any necessary landlord consents, financial and operational information regarding the proposed transferee, and evidence of any financing that may be required to complete the transaction and/or fund the transferee's operation after the transfer.
- 12.4.2 The transferor shall have executed a general release (which shall include a release from the transferor, Franchisee, Franchisee's owners, and guarantors), in a form satisfactory to Del Taco, of any and all claims against Del Taco and its affiliates, successors, and assigns, and their respective directors, officers, shareholders, partners, agents, representatives, servants, and employees in their corporate and individual capacities including claims arising under this Agreement, any other agreement between Del Taco and Franchisee or their affiliates, and federal, state, and local laws and rules.
- 12.4.3 The transferee of an owner shall be designated as an owner and each transferee who is designated as an owner shall enter into a written agreement, in a form satisfactory to Del Taco, agreeing to be bound as an owner under the terms of this Agreement as long as such person or entity owns any interest in Franchisee; and, if Franchisee's obligations were guaranteed by the transferor, the owner shall guarantee the performance of all such obligations in writing in a form satisfactory to Del Taco.
- 12.4.4 Prior to and after the transfer, Franchisee's new owners shall meet Del Taco's educational, managerial, and business standards; each shall possess a good moral character, business reputation, and credit rating;
Source: Item 10 — FINANCING (FDD page 31)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Del Taco does not explicitly offer financing assistance to franchisees. However, in the event of a transfer of ownership, Del Taco requires the franchisee and the proposed transferee to provide all information and documents requested by Del Taco for its evaluation of the proposed transfer, transaction, and transferee, including evidence of any financing that may be required to complete the transaction and/or fund the transferee's operation after the transfer. This suggests that Del Taco reviews the financial capabilities of potential transferees, which indirectly relates to financing.
While Del Taco does not directly provide financing, they do offer guidance during site selection. Del Taco will furnish suggested site selection criteria, which is currently reflected in advice based on site and demographic factors, and will include Del Taco's minimum standards for a location for the Restaurant. Del Taco will also provide such site selection counseling and assistance as Del Taco may deem advisable. Del Taco recommends, but does not require, that Franchisee engage the services of a third-party real estate or site evaluation professional or business, to assist with the analysis and evaluation of a particular site, and/or to utilize competitive sales data from a third-party. This service could indirectly impact a franchisee's ability to secure financing by helping them choose viable locations.
Prospective franchisees should inquire directly with Del Taco about any preferred lenders or relationships they have that could assist with financing. It would also be prudent to ask existing franchisees about their experiences in securing financing and any recommendations they might have. Understanding the specific financial requirements and potential challenges early in the process is crucial for making an informed decision.