Are there any conditions that would affect the Development Fee amount for a Del Taco Development Agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
re immediately upon the required opening date for the last Restaurant set forth on the Development Schedule or the actual opening date for the last Restaurant, whichever first occurs, unless sooner terminated in accordance with the terms and conditions of this Agreement.
-
- Time of Essence. Time is of the essence of this Agreement.
5. Fees. The Developer shall pay to Del Taco the following fees:
- (a) In consideration of the Development Rights granted in this Agreement, the Developer shall pay to Del Taco a fully non-refundable Development Fee of $35,000 for the first Restaurant scheduled for opening and $10,000 for each additional Restaurant scheduled for opening, payable upon execution and delivery by the Developer of this Agreement. As between Developer and Del Taco, Del Taco shall earn the Development Fee upon the execution of this Agreement and shall not have any obligation to refund any portion of the Development Fee.
- (b) Upon the execution by the Developer of a Franchise Agreement, Del Taco shall credit from the Development Fee $35,000 for the first Restaurant scheduled for opening and $10,000 for each subsequent Restaurant scheduled for opening towards the initial franchise fee for each of those Restaurants. The Developer shall pay the balance of the initial franchise fee for the second and each subsequent Restaurant scheduled for opening. The Developer acknowledges that, once it has executed a Franchise Agreement for a Restaurant, the Developer will not have the right to a refund of any portion of the foregoing fees.
- (c) Notwithstanding any provision of the Agreement to the contrary, if Developer is not able to timely meet its Development Schedule, and provided that Developer and its affiliates are in full compliance with all agreements with Del Taco, Developer may request a twelve-month extension of one or more of the development deadlines in the Development Schedule, which extension Del Taco may grant or deny at its sole option. To request an extension of a development deadline, Developer must provide Del Taco at least six months' advance written notice. For each twelve-month extension of such deadline(s) that Del Taco approves in writing, Developer must (A) pay Company a fee calculated as follows: $5,000 times the number of development deadlines that Developer wishes to extend for twelve months ("Extension Fee") and (B) sign an amendment to the Development Agreement to reflect these specific dates of the extension, and which will include a general release in the form in general use by Del Taco at the time, in favor of Del Taco and its officers, directors, agents, employees, subsidiaries, and affiliates. The Extension Fee is earned upon receipt and is non-refundable;
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the standard Development Fee is $35,000 for the first restaurant and $10,000 for each additional restaurant scheduled for opening. This fee is generally non-refundable and is paid upon the execution of the Development Agreement. However, there are circumstances where this fee can be affected, specifically related to development incentives and extensions.
Del Taco offers a development incentive program for new restaurants in undeveloped or emerging markets. To qualify for this program, the developer must adhere to the development schedule outlined in the Development Agreement. If the developer fails to meet the schedule or breaches the Development or Franchise Agreement, they may lose the development incentives. This means the developer would have to immediately pay Del Taco the amount of any reduction in Initial Franchise Fees or Royalty Fees they previously received as part of the incentive program.
Additionally, if a developer is unable to meet the development schedule but remains in full compliance with all agreements, they can request a twelve-month extension for one or more development deadlines. Del Taco has the sole discretion to grant or deny this extension. If Del Taco approves the extension, the developer must pay an Extension Fee of $5,000 for each development deadline they wish to extend for twelve months. This Extension Fee is initially non-refundable but will be credited towards the Franchise Fee for the location upon execution of the applicable Franchise Agreement. Therefore, while the initial Development Fee itself remains as stated, the adherence to the development schedule and any requests for extensions can introduce additional fees or affect the benefits associated with the initial fee.