Is Del Taco required to use the funds received from supplier rebates for system-wide promotions?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
During our fiscal year ended September 29, 2024, two suppliers provided rebates back to us and to franchisees quarterly in arrears based on our respective purchases totaling approximately 10.2% of the purchases involved. Although we are not required to do so, we used the funds we received to help pay for system-wide promotions (directly or through the advertising fund). Except for the two vendors noted above, we do not currently receive any revenue, rebates, or other payments from designated suppliers based on franchisee purchases, though we reserve the right to do so in the future.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–30)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, while Del Taco receives rebates from certain suppliers, they are not obligated to use these funds specifically for system-wide promotions. During the fiscal year ended September 29, 2024, two suppliers provided rebates to Del Taco and its franchisees, totaling approximately 10.2% of the purchases involved. Although not required, Del Taco chose to use these funds to help pay for system-wide promotions, either directly or through the advertising fund.
This indicates that Del Taco has the discretion to decide how to allocate these rebate funds. They could potentially use them for other purposes or retain them as profit. This flexibility is a potential benefit for Del Taco, as it allows them to adapt their spending based on the company's needs and priorities. However, it also means that franchisees cannot rely on these rebates being consistently used to support system-wide promotions.
It's important for prospective franchisees to understand that while Del Taco has historically used these rebates for promotions, this is not a guaranteed practice. Franchisees should inquire about Del Taco's current policy regarding supplier rebates and how they are used to support the franchise system. Understanding this policy will help franchisees better assess the potential benefits and costs associated with the franchise.