What renewal fee is required to be paid to Del Taco when renewing the franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
f, the initial term of this Agreement shall commence on the Effective Date and expire on the date that is the earlier of (a) twenty (20) years after the opening date of the Restaurant or (b) the expiration date of the lease for the Restaurant premises, including all applicable extensions or renewals.
- 2.2 Renewal. Franchisee may, at its option, renew Franchisee's right to operate the Restaurant for one (1) additional term which shall be the lesser of (a) twenty (20) years or (b) the remaining term of the lease for the Restaurant premises, including all applicable extensions or renewals, subject to the following conditions, each of which must be met prior to such renewal:
- 2.2.1 Franchisee shall deliver to Del Taco a written notice of Franchisee's election to renew no fewer than twelve (12) months nor more than eighteen (18) months prior to
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a franchisee must pay a renewal fee if they choose to renew their franchise agreement. This renewal fee is the greater of $35,000 or Del Taco's then-current initial franchise fee for a new Del Taco Restaurant. This fee is due when the franchisee delivers written notice of their election to renew the agreement.
This means that if Del Taco increases its initial franchise fee, the renewal fee will also increase accordingly. The franchisee needs to be prepared to pay whichever amount is higher at the time of renewal. This could be a significant expense, especially if the initial franchise fee has increased substantially since the original agreement.
In addition to the renewal fee, the franchisee must meet other conditions to be eligible for renewal. These conditions include providing evidence of the right to remain in possession of the restaurant premises, refurbishing the restaurant to meet Del Taco's current specifications, satisfying all monetary obligations to Del Taco, executing a general release of claims against Del Taco, and executing Del Taco's then-current form of franchise agreement. The franchisee must also comply with Del Taco's qualification and training requirements.
Furthermore, upon execution of the renewal franchise agreement, the franchisee must pay a Promotional Fee equal to the greater of $10,000, or the Promotional Fee then being charged to new franchisees. The terms, conditions, and provisions of the renewal franchise agreement, and the obligations of the parties, may differ substantially from the terms, conditions, provisions and obligations in the original agreement, including a higher percentage Royalty Fee and advertising contribution or expenditure, and a different or modified Protected Area.