Which state's law governs the Del Taco franchise agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in the Agreement | Summary |
|---|---|---|
| n. Our right of first refusal to | Not applicable | Not applicable. |
| acquire your business | ||
| o. Our option to purchase your | Not applicable | Not applicable |
| business | ||
| p. Your death or disability | Not applicable | Not applicable |
| q. Non-competition covenants during the term of the franchise | 17(e) | You 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. (subject to state law) |
| r. Non-competition covenants after the franchise terminates or expires | 17(e) | You cannot have any interest in a competitive business for two years after expiration or termination, 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. (subject to state law) |
| s. Modification of the | 23 | All changes require mutual agreement in writing. |
| agreement | ||
| t. Integration/ merger clause | 23 | Only the written terms of agreement and the exhibits bind the parties. Notwithstanding the foregoing, nothing in this or any related agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. Any representations or promises outside of the Franchise Disclosure Document and other agreements may not be enforceable. (Subject to state law) |
| u. Dispute resolution by arbitration or mediation | 18 | The parties must arbitrate any controversy or claim, except that either party may file for preliminary injunctive relief, a restraining order, or order of specific performance, including, without limitation, injunctive relief pertaining to the use of the Del Taco System and Marks. |
| v. Choice of forum | 18 and 20 | All litigation and arbitration must take place in Orange County, California, subject to applicable state law. See Exhibit F. |
| w. Choice of law | 20 | California law applies, subject to applicable state law. See Exhibit F. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, the franchise agreement is generally governed by California law. However, this is subject to applicable state laws, meaning that specific provisions may be modified or superseded based on the franchisee's location. Exhibit F of the FDD provides further details on state-specific amendments.
For instance, the FDD includes addenda for states like Indiana, Virginia, Rhode Island, and South Dakota, which modify certain provisions of the standard franchise agreement to comply with local franchise laws. These modifications can affect aspects such as non-compete agreements, dispute resolution processes, and payment schedules. In Indiana, for example, the franchise agreement is amended to omit any reference to selection of an out-of-Indiana forum or choice of law.
Prospective Del Taco franchisees should carefully review Exhibit F and any state-specific addenda applicable to their location to understand how the franchise agreement may be modified. They should also consult with a legal professional to ensure they are fully aware of their rights and obligations under both the standard agreement and any applicable state laws. This is particularly important in states with strong franchise protection laws, as these laws can significantly alter the franchisor-franchisee relationship.