During the term of the Del Taco franchise, what constitutes a 'competitive business' that a franchisee is prohibited from operating?

According to the 2025 Del Taco Franchise Disclosure Document, during the term of the franchise agreement, a franchisee is restricted from operating a 'competitive business.' Specifically, a 'competitive business' is defined as any restaurant or food service operation that offers one or more Mexican or similar style menu items. This restriction applies to businesses operating in a quick service, fast food, or fast-casual format. This means a Del Taco franchisee cannot simultaneously operate another restaurant that serves similar food and operates under a similar service model.

This non-competition covenant aims to protect the Del Taco brand and market share by preventing franchisees from directly competing with the Del Taco system. The restriction ensures that franchisees focus their efforts on growing their Del Taco business and do not divert resources or expertise to competing ventures. The FDD also notes that these non-competition covenants are subject to state law, meaning the specific enforcement and interpretation of these clauses can vary depending on the state in which the franchise operates.

It is important for prospective franchisees to understand the scope of this restriction. They should carefully consider whether they have any existing business interests or future plans that might conflict with this non-competition clause. Additionally, franchisees should seek legal counsel to understand how state laws might affect the enforceability of these covenants in their specific location. Understanding these restrictions is crucial for avoiding potential breaches of the franchise agreement and maintaining a positive relationship with Del Taco.