During the term of the agreement, what actions are prohibited regarding diverting business from a Del Taco restaurant?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
park complexes, train stations, bus stations or other transportation facilities and other locations owned or operated by major institutions with sites throughout the country or a particular state, or any other outlet and to use the System in connection with those Alternative Points of Distribution.
- 1.2.3 Offer and sell any products or services (including those offered by the Restaurant), under any marks (including the Proprietary Marks) outside of the Protected Area, and through any means (including through a Del Taco Restaurant);
- 1.2.4 Construct and operate other Del Taco Restaurants and to use the Del Taco System or any part of the Del Taco System at any location outside the Protected Area and to license others to do the same;
- 1.2.5 Establish, operate, and license others to establish and operate, businesses other than Del Taco Restaurants within and outside of the Protected Area;
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, several actions are prohibited that could divert business away from a Del Taco restaurant during the term of the franchise agreement. Specifically, franchisees are restricted from offering or selling products or services similar to those at Del Taco, under any marks, including Del Taco's Proprietary Marks, outside of their designated Protected Area. They are also prohibited from constructing or operating other Del Taco restaurants or using the Del Taco System outside their Protected Area, or licensing others to do so.
Furthermore, franchisees cannot establish, operate, or license businesses other than Del Taco restaurants, or any co-branded or multi-branded restaurant or food-related business that uses Del Taco's Proprietary Marks and offers similar menu items, within or outside the Protected Area. Franchisees are also restricted from engaging in any activity that Del Taco is not expressly prohibited from taking under the agreement. These restrictions are designed to protect the Del Taco brand and prevent franchisees from directly competing with or diminishing the business of other Del Taco restaurants.
These restrictions are typical in franchise agreements to maintain brand consistency and protect market share. Prospective franchisees should carefully review the definition of "Protected Area" and the scope of prohibited activities to understand the limitations on their business operations. It is important to note that these restrictions apply during the term of the agreement, and additional post-term covenants may also apply after the agreement expires or is terminated, as outlined in Section 10.6 of the franchise agreement.