Can Del Taco require franchisees and their managers to sign an agreement regarding trade secrets and confidential information?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
10.1 Confidential Information. Franchisee shall not, during the term of this Agreement or thereafter, communicate, divulge, or use for the benefit of any other person, persons, partnership, entity, association, or corporation any confidential information, trade secrets, knowledge, or know-how concerning the methods of operation of the business franchised hereunder which may be communicated to Franchisee or of which Franchisee may be apprised by virtue of Franchisee's operation under the terms of
this Agreement (the "Confidential Information"). Franchisee shall divulge such Confidential Information only to such of its employees as must have access to it in order to operate the Restaurant. Any and all information, knowledge, know-how, and techniques which Del Taco designates as confidential shall be deemed confidential for purposes of this Agreement, except information which Franchisee can demonstrate came to its attention prior to disclosure thereof by Del Taco; or which, at or after the time of disclosure by Del Taco to Franchisee, had become or later becomes a part of the public domain, through publication or communication by others. Any employee who may have access to any Confidential Information regarding the Restaurant shall execute a covenant that s/he will maintain the confidentiality of information they receive in connection with their association with Franchisee. Such covenants shall be on a form provided by Del Taco, which form shall, among other things, designate Del Taco as a third party beneficiary of such covenants with the independent right to enforce them. Notwithstanding any other provision of this Agreement, there may be certain, limited circumstances where applicable law allows for the disclosure of certain trade secrets, as specified in the Manuals.
- 10.2 Irreparable Injury.
Franchisee acknowledges that any failure to comply with the requirements of this Section 10 will cause Del Taco irreparable injury, and Franchisee agrees to pay all court costs and reasonable attorney's fees incurred by Del Taco in obtaining specific performance of, or an injunction against violation of, the requirements of this Section 10.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 42)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, Del Taco requires franchisees to maintain the confidentiality of trade secrets and confidential information, and also requires that any employee who may have access to confidential information sign a confidentiality agreement. Specifically, franchisees must not disclose or use any confidential information or trade secrets related to the operation of the Del Taco business, and they must ensure their employees with access to such information also maintain its confidentiality. Del Taco provides a form for these employee covenants, designating Del Taco as a third-party beneficiary with the right to enforce them.
This obligation extends both during the term of the Franchise Agreement and even after it ends. The FDD specifies that any failure to comply with these confidentiality requirements will cause irreparable injury to Del Taco, and the franchisee will be responsible for all court costs and reasonable attorney's fees incurred by Del Taco in enforcing these provisions.
Furthermore, franchisees must treat Del Taco's operations manuals and the information within them as confidential, using their best efforts to keep the information secret and protected. Franchisees are prohibited from copying or reproducing the manuals or making them available to unauthorized individuals. This is a fairly standard practice in franchising, as protecting intellectual property and operational methods is crucial for maintaining brand consistency and competitive advantage.