When is the Del Taco transfer fee due, at the earlier of which two events?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
lete (to Del Taco's satisfaction) all training programs required by Del Taco upon such terms and conditions as Del Taco may reasonably require (and while Del Taco will not charge a fee for attendance at such training programs, the transferee shall be responsible for the salary and all expenses of the person who attends training).
- 12.4.10 In connection with any proposed transfer, to compensate Del Taco for Del Taco's legal, accounting, training, and other expenses incurred in connection with the transfer, Franchisee shall pay Del Taco a non-refundable transfer fee in the amount of Five Thousand Dollars ($5,000). The transfer fee shall be paid at the earlier of (a) when the transferee signs the new franchise agreement, or (b) when the transferee begins training. The transfer fee is non-refundable. In addition, in the event a proposed transfer is not consummated or closed, for any reason except for disapproval by Del Taco, Franchisee or the proposed transferee
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a franchisee must pay a non-refundable transfer fee of $5,000 to Del Taco to compensate for legal, accounting, training, and other expenses related to the transfer. This fee becomes due at the earlier of two events.
The first trigger for payment is when the transferee (the party acquiring the franchise) signs the new franchise agreement with Del Taco. This signifies a commitment to the transfer and initiates Del Taco's involvement in finalizing the arrangement. The second trigger is when the transferee begins their training program with Del Taco. This indicates that the transfer process is moving forward, and Del Taco is investing resources in preparing the new franchisee.
It's important to note that the $5,000 transfer fee is non-refundable, regardless of whether the transfer is ultimately completed. Furthermore, if the transfer is not consummated due to reasons other than Del Taco's disapproval, the franchisee or proposed transferee must reimburse Del Taco for all costs and expenses incurred during the evaluation process, including legal and accounting fees, background checks, site evaluation, and training, to the extent that these costs exceed the initial $5,000 transfer fee. This policy ensures that Del Taco is compensated for its expenses even if the transfer falls through due to the franchisee's or transferee's actions.