Does Del Taco have the right to collect allowances from suppliers based on a Del Taco franchisee's purchases?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5.13.4 Franchisee acknowledges and agrees that Del Taco shall have the right to collect and retain all manufacturing allowances, marketing allowances, rebates, credits, monies, payments or benefits (collectively, "Allowances") offered by suppliers to Franchisee or to Del Taco or its affiliates based upon Franchisee's purchases of products and other goods and services.
These Allowances may be based on System-wide purchases of food, beverages, paper goods, merchandise and other items.
Franchisee assigns to Del Taco or its designee all of Franchisee's right, title and interest in and to any and all such Allowances and authorizes Del Taco or its designee to collect and retain any or all such Allowances without restriction (unless otherwise instructed by the supplier).
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, Del Taco has the right to collect and retain allowances from suppliers based on a franchisee's purchases. These allowances include manufacturing allowances, marketing allowances, rebates, credits, monies, payments, or benefits offered by suppliers. These allowances may be based on system-wide purchases of food, beverages, paper goods, merchandise, and other items.
As a Del Taco franchisee, you assign all rights, titles, and interests in these allowances to Del Taco or its designee. Del Taco is authorized to collect and retain these allowances without restriction, unless the supplier instructs otherwise. This means that any financial benefits or incentives provided by suppliers based on your purchases will be directed to Del Taco, potentially impacting the franchisee's overall cost of goods.
This practice is relatively common in franchising, where franchisors leverage the collective buying power of the entire franchise system to negotiate favorable terms with suppliers. While the franchisee may not directly benefit from these allowances, the franchisor may use them to fund system-wide initiatives, such as marketing campaigns or technology upgrades, which could indirectly benefit the franchisee. Prospective franchisees should inquire how these collected allowances are utilized by Del Taco to support the franchise system and whether this arrangement affects the pricing of goods and services they purchase from approved suppliers.