What rights does Del Taco grant to the franchisee under the franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
, and service and the necessity of operating the business franchised under this Agreement in conformity with Del Taco's standards and specifications.
Now, therefore, in consideration of the foregoing and of the covenants contained in this Agreement, the parties agree as follows:
1. Grant.
1.1 Grant of Rights. Upon the terms and conditions set forth in this Agreement, Del Taco hereby grants to Franchisee the right, and Franchisee accepts and undertakes the obligation, to: (a) operate one (1) Del Taco Restaurant under the System (the "Restaurant"); (b) to use, only in connection with the
Restaurant, the Proprietary Marks and the System, as they may be changed, improved, or further developed from time to time by Del Taco; and (c) and to do so only at or from a physical premises located within the Protected Area (defined below in Section 1.2) at the location specified in Exhibit A. If, at the time of execution of this Agreement, a location for the Restaurant has not been obtained by Franchisee and approved by Del Taco, Franchisee shall lease, sublease, or acquire a site for the Restaurant, subject to Del Taco's written consent in accordance with the Site Selection Addendum attached as Exhibit B (the "Site Selection Addendum"). Franchisee shall not relocate the Restaurant without Del Taco's prior written consent. Del Taco shall grant or withhold consent of the relocation of the Restaurant under this Section 1.1.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the franchisee is granted the right to operate one Del Taco Restaurant under the Del Taco system. This includes the right to use the system in connection with the Restaurant. The agreement specifies that Del Taco is in the business of operating and franchising restaurants that sell menu items and products under the Del Taco system and proprietary marks. The franchisee acknowledges the importance of maintaining Del Taco's standards for quality, cleanliness, appearance, and service.
Del Taco also licenses the use of data back to the franchisee at no additional cost, but this is solely for the term of the agreement and only for use in connection with the franchised business. The franchisee has the right to use customer data while the agreement is in effect, or during any successor or renewal franchise agreement, but only in connection with operating the Restaurant and following Del Taco's established policies. The franchisee cannot sell, transfer, or use customer data for purposes other than operating the Restaurant and marketing Del Taco brand products and services.
However, the rights granted to the franchisee are subject to several limitations and conditions. The franchisee's rights and duties are personal to them, and the franchise is granted based on the franchisee's business skill, financial capacity, and personal character. The franchisee's ability to transfer the agreement or any ownership interest in the franchise is restricted without Del Taco's prior written consent. Del Taco retains significant control over various aspects of the business, including supplier selection, sign manufacturing, and access to data. Del Taco also has the right to inspect the Restaurant premises at any time to ensure compliance with the agreement and system standards.
Del Taco also retains the right to transfer or assign the agreement, the system, and confidential information to any person or legal entity without the franchisee's consent. This means a franchisee could be working with a completely different entity during the term of the agreement. Additionally, Del Taco reserves the right to change the requirements for the restaurant during a renewal term, including requiring the franchisee to refurbish, remodel, renovate, and upgrade the Restaurant to comply with Del Taco's then-current specifications for new Del Taco restaurants. The franchisee may also be required to pay a higher percentage royalty fee and advertising contribution or expenditure under a renewal agreement.