Can the terms of the renewal franchise agreement for a Del Taco franchise differ from the initial agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
tors, agents, and employees;
- 2.2.8 Franchisee shall execute Del Taco's then-current form of franchise agreement, which agreement shall supersede this Agreement in all respects (except with respect to the renewal provisions of the new franchise agreement, which shall not supersede this Section 2.2). Franchisee acknowledges that the terms, conditions, and provisions of the renewal franchise agreement, and the obligations of the parties, may differ substantially from the terms, conditions, provisions and obligations in this Agreement, including a higher percentage Royalty Fee and advertising contribution or expenditure, and a different or modified Protected Area;
- 2.2.9 Upon execution of the then-current form of franchise agreement, Franchisee also shall pay a Promotional Fee (defined below) equal t
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the terms and conditions of the renewal franchise agreement may differ substantially from the initial agreement. Specifically, the renewal agreement may include a higher percentage royalty fee and advertising contribution or expenditure. Additionally, the protected area granted to the franchisee could be different or modified in the renewal agreement.
To renew the franchise agreement, a franchisee must execute Del Taco's then-current form of franchise agreement. This new agreement supersedes the original agreement in all respects, except for the renewal provisions of the new franchise agreement itself. Franchisees must also pay a promotional fee equal to the greater of $10,000 or the promotional fee then being charged to new franchisees. Furthermore, franchisees and their personnel must comply with Del Taco's current qualification and training requirements before commencing operations under the renewal agreement.
This means that when considering a Del Taco franchise, prospective franchisees should be aware that the financial obligations and operational requirements could change upon renewal. The potential for increased fees and modified protected areas could impact the profitability and operational strategy of the franchise. Franchisees need to factor in these potential changes when evaluating the long-term viability of their investment and should discuss these aspects with Del Taco during their due diligence.