What is the relationship between the promotional fee for Del Taco (Item 5) and the franchisee's ongoing obligations to participate in marketing and advertising campaigns?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
If you purchase the rights to develop and operate one Del Taco Restaurant under a Franchise Agreement, you must pay us a Franchise Fee of $35,000 and a Promotional Fee of $10,000 when you sign the Franchise Agreement.
You must spend the Promotional Fee, with the approval and coordination of our Marketing Department, for the purpose of promoting your Restaurant. You must submit invoices to us for promotional expenditures for our direct payment to the vendor or for reimbursement. We will not pay or reimburse you for food or paper costs. If you do not spend the Promotional Fee within one year after the opening date of your Restaurant, you will forfeit the unused portion of the fee and our current practice is to apply these funds toward our general advertising programs.
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, franchisees must pay a $10,000 Promotional Fee upon signing the Franchise Agreement. This fee is intended to be used, with the approval and coordination of Del Taco's Marketing Department, to promote the franchisee's specific restaurant within a year of its opening. The franchisee is responsible for submitting invoices for promotional expenditures, which Del Taco will either pay directly to the vendor or reimburse to the franchisee. However, Del Taco will not cover food or paper costs with this fee. If the franchisee fails to spend the entire Promotional Fee within one year of opening, the unused portion is forfeited and will be used by Del Taco for its general advertising programs.
Beyond the initial Promotional Fee, Del Taco franchisees are obligated to participate in marketing and advertising campaigns as outlined in the franchise agreement. Del Taco retains the right to direct all advertising programs, including the concepts, materials, and media used. While the franchisor will use marketing fees to enhance the Del Taco system's image, it is not obligated to ensure that expenditures for a franchisee are equivalent or proportionate to the franchisee's contribution, or to ensure that any particular franchisee benefits directly or pro rata from such expenditures.
Franchisees must also adhere to Del Taco's standards for local advertising and promotion, obtaining written approval from Del Taco for all advertising and promotional plans and materials. Franchisees must comply with all written instructions, policies, procedures, and restrictions regarding advertising and marketing, including rules about honoring gift certificates and promotions. Del Taco also maintains a Social Media and Social Networking Policy that franchisees must consider before engaging in any online activity. Del Taco retains sole discretion and control over any profiles using or relating to their trademarks on social media outlets.
Del Taco may require franchisees to participate in customer surveys and use specific computer software to compile information as part of the marketing program, at the franchisee's expense. While Del Taco intends to use marketing funds to benefit the entire Del Taco system, there is no obligation to use contributions from a franchisee's restaurant or area specifically for advertising in that area, and there is no assurance that a franchisee's restaurant will benefit directly or in proportion to their contribution.