Is Del Taco responsible for securing financing for its franchisees?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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
12.4.10 In connection with any proposed transfer, to compensate Del Taco for Del Taco's legal, accounting, training, and other expenses incurred in connection with the transfer, Franchisee shall pay Del Taco a non-refundable transfer fee in the amount of Five Thousand Dollars ($5,000).
The transfer fee shall be paid at the earlier of (a) when the transferee signs the new franchise agreement, or (b) when the transferee begins training.
The transfer fee is non-refundable.
In addition, in the event a proposed transfer is not consummated or closed, for any reason except for disapproval by Del Taco, Franchisee or the proposed transferee shall reimburse Del Taco for all of Del Taco's costs and expenses incurred in connection with Del Taco's evaluation of the proposed transfer, including attorneys' and accountants' fees, background checks, site evaluation, and training, if applicable, to the extent the portion of the transfer fee paid does not cover those costs and expenses.
12.12 Securities Offerings. All materials for an offering of stock or partnership interests in Franchisee or any of Franchisee's affiliates which are required by federal or state law shall be submitted to Del Taco for review as described below before such materials are filed with any government agency. Any materials to be used in any exempt offering shall be submitted to Del Taco for such review prior to their use. No offering by Franchisee or any of Franchisee's affiliates shall imply (by use of the Proprietary Marks or otherwise) that Del Taco is participating in an underwriting, issuance, or offering of the securities of Franchisee or Franchisee's affiliates; and Del Taco's review of any offering shall be limited solely to the relationship between Del Taco and Franchisee and any subsidiaries and affiliates, if applicable, and shall not constitute any opinion as to any legal requirement. Del Taco may, at its option, require the offering materials to contain a written statement prescribed by Del Taco concerning the limitations stated in the preceding sentence. Franchisee (and the offeror if not Franchisee), the owners, and all other participants in the offering must fully indemnify Del Taco, its subsidiaries, affiliates, successor, and assigns, and their respective directors, officers, shareholders, partners, agents, representatives, servants, and employees in connection with the offering and shall execute any and all documents required by Del Taco to endorse such indemnification. For each proposed offering, Franchisee shall pay Del Taco a non-refundable fee of Five Thousand Dollars ($5,000) or such greater amount as is necessary to reimburse Del Taco for its reasonable costs and expenses (including legal and accounting fees) for reviewing the proposed offering. Franchisee shall give Del Taco written notice at least thirty (30) days before the date that any offering or other transaction described in this Section 12 commences. Any such offering shall be subject to all of the other provisions of this Section 12; and further, without limiting the foregoing, it is agreed that any such offering shall be subject to Del Taco's approval as to the structure and voting control of the offeror (and Franchisee, if Franchisee is not the offeror) after the financing is completed.
Source: Item 10 — FINANCING (FDD page 31)
What This Means (2025 FDD)
Based on the 2025 Del Taco Franchise Disclosure Document, Del Taco does not secure financing for its franchisees. However, the FDD does outline certain financial obligations and procedures related to transfers and securities offerings.
Specifically, if a franchisee proposes to transfer their obligations or any interest in the restaurant, they must provide Del Taco with evidence of any financing required to complete the transaction. Del Taco also requires a non-refundable transfer fee of $5,000 to cover legal, accounting, and training expenses associated with the transfer. This fee is payable when the transferee signs the new franchise agreement or begins training. If the transfer is not completed due to reasons other than Del Taco's disapproval, the franchisee must reimburse Del Taco for all costs incurred during the evaluation of the proposed transfer, including attorney and accountant fees, background checks, site evaluation, and training, to the extent that the transfer fee does not cover these expenses.
Additionally, if a franchisee plans to offer stock or partnership interests, all offering materials required by federal or state law must be submitted to Del Taco for review before being filed with any government agency. For each proposed offering, the franchisee must pay Del Taco a non-refundable fee of $5,000, or a greater amount if necessary to cover Del Taco's reasonable costs and expenses, including legal and accounting fees, for reviewing the proposed offering. The franchisee must provide Del Taco with written notice at least 30 days before the offering commences. These stipulations ensure Del Taco maintains oversight and is compensated for expenses related to financial activities undertaken by its franchisees, but do not indicate any responsibility on Del Taco's part to secure financing for franchisees.