What restrictions are placed on operating a competitive business during the term of my Del Taco franchise agreement?

According to Del Taco's 2025 Franchise Disclosure Document, there are non-competition covenants in place during the term of the franchise agreement. Specifically, a franchisee cannot use the Del Taco system, including names, marks, systems, logotypes, symbols, or foodstuffs provided by Del Taco or an approved supplier, in connection with another restaurant.

Furthermore, a franchisee is prohibited from operating any "competitive business." According to the FDD, a competitive business is defined as a restaurant or food service business that offers one or more Mexican or similar style menu items and operates in a quick service, fast food, or fast-casual format. These restrictions are subject to state law, meaning the specific enforcement and interpretation of these covenants can vary depending on the state in which the Del Taco franchise is located.

For franchisees operating under a Development Agreement, the restrictions are slightly different. In this case, a franchisee cannot have any interest in a competitive business within the protected area of any restaurant operated under a franchise agreement executed pursuant to the Development Agreement or any other existing Del Taco restaurant. This restriction is also subject to state law. It is important for prospective franchisees to understand the specific definition of "protected area" as defined in their specific franchise or development agreement, as this will determine the geographic scope of the non-competition covenant during the term of the agreement.