Can the royalty fee for a Del Taco franchise increase upon renewal?

According to Del Taco's 2025 Franchise Disclosure Document, the royalty fee can increase upon renewal. Specifically, the FDD states that the terms and conditions of the renewal franchise agreement may differ substantially from the original agreement. This includes the possibility of a higher percentage royalty fee.

For a prospective Del Taco franchisee, this means that the financial obligations could change when renewing the franchise agreement. While the initial agreement specifies a royalty fee, the renewal agreement could stipulate a higher percentage. This is a crucial factor to consider when evaluating the long-term profitability and sustainability of the franchise.

Furthermore, the franchisee must execute Del Taco's then-current form of franchise agreement, which supersedes the original agreement in all respects, except for the renewal provisions of the new franchise agreement. In addition to a potentially higher royalty fee, the franchisee may also be required to pay a Promotional Fee equal to the greater of $10,000 or the Promotional Fee then being charged to new franchisees. Therefore, franchisees need to carefully review the terms of the renewal agreement to understand the potential changes in fees and other obligations.