What is the role of the Operating Principal for a Del Taco franchise, and what are the requirements for this position?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
p, as permitted under this Agreement; and (iv) maintain stop transfer instructions on its records against the transfer of equity securities and shall only issue securities upon the face of which bear a legend, in a form satisfactory to Del Taco, which references the transfer restrictions imposed by this Agreement.
- 5.27.4 Franchisee shall designate, subject to the review and approval or disapproval by Del Taco, individuals to serve in the following positions:
- 5.27.4.1 Operating Principal. An Operating Principal shall participate personally in the direct operation of the Restaurant. If Franchisee is an individual and meets the required qualifications, Franchisee may serve as the Operating Principal for the Restaurant. Franchisee shall notify Del Taco promptly if the individual serving as the Operating Principal for the Restaurant no longer serves as an employee of Franchisee or no longer meets the requirements of being an Operating Principal for the Restaurant. "Operating Principal" shall mean an individual who (1) has at least five years of management experience in the operation of a quick service restaurant (or, if Franchisee or Franchisee's affiliate operates at least one Del Taco Restaurant as of the Effective Date, the Operating Principal of the Restaurant must have at least two years of management experience in the operation of a quick service restaurant), (2) has completed Del Taco's required training program, (3) Del Taco has approved to supervise the day-to-day
operations of the Restaurant, (4) owns at least 10% of the equity interest in Franchisee if Franchisee is a business entity, and (5) lives no more than a three-hour drive from the Restaurant.
- 5.27.4.2 Owners: An "owner" is any person that has any direct or indirect interest in Franchisee, or in any entity that has any direct or indirect ownership interest in Franchisee. All owners along with their ownership interests, shall be identified in Exhibit D hereto, and any change in ownership, whether subject to Section 12.3 or not, shall be provided to Del Taco, in advance and in writing, and Exhibit D shall be amended to reflect all changes in ownership.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the Operating Principal plays a crucial role in the direct operation of the restaurant. All aspects of the franchised business must be conducted under their management and supervision. The daily operations of the restaurant must be supervised under the active full-time management of either the Operating Principal or a Restaurant Manager, provided they have successfully completed Del Taco's initial training program. If either the Operating Principal or Restaurant Manager ceases their active management or employment, a qualified replacement must be enrolled in Del Taco's initial training program within 30 days.
To qualify as an Operating Principal for a Del Taco franchise, several requirements must be met. The individual must have at least five years of management experience in the operation of a quick service restaurant. However, if the franchisee or their affiliate already operates at least one Del Taco Restaurant, the Operating Principal only needs two years of management experience in a quick service restaurant. The Operating Principal must also complete Del Taco's required training program and be approved by Del Taco to supervise the day-to-day operations of the restaurant.
In addition to experience and training, the Operating Principal must also have a financial stake in the franchise. If the franchisee is a business entity, the Operating Principal must own at least 10% of the equity interest. Finally, the Operating Principal must live within a three-hour drive of the Del Taco restaurant. If the franchisee is an individual and meets all the necessary qualifications, they may serve as the Operating Principal. Del Taco must be promptly notified if the individual serving as the Operating Principal no longer serves as an employee or no longer meets the requirements for the position.
The Operating Principal, along with each owner, must execute a Guarantee, Indemnification, and Acknowledgement, if the franchisee is a business entity. This requirement may be waived for individuals who acquire the franchisee's securities (excluding a controlling interest) after the franchisee becomes registered under the Securities Exchange Act of 1934. The role and requirements of the Operating Principal are designed to ensure that each Del Taco franchise is managed by experienced and qualified individuals who are committed to the success of the business.