Did Del Taco have any transfers in or out of Level 1, 2, or 3 for its financial liabilities during the periods presented?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
l proceeds of $1.5 million, $0.9 million, and $1.4 million, respectively, related to the extension of the underlying franchise and lease agreements from the sale of restaurants in prior years.
Franchise acquisitions — In 2024, Del Taco purchased 10 franchise-operated restaurants for $86 thousand as part of three separate transactions, and recognized related gains of $2.7 million. In 2022, Jack in the Box acquired 13 franchise restaurants for total consideration of $0.3 million, comprised of franchise receivables owed to the Company as of the acquisition date. There were no such acquisitions in 2023. We account for the acquisition of franchised restaurants us
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the purchase price allocations for franchise acquisitions were based on fair value estimates that used significant unobservable inputs, categorized as Level 3. This indicates that Del Taco relies on internal data and subjective assessments to determine the fair value of acquired franchise restaurants.
Specifically, in 2024, Del Taco purchased 10 franchise-operated restaurants for $86 thousand as part of three separate transactions, and recognized related gains of $2.7 million. In 2022, Jack in the Box acquired 13 franchise restaurants for total consideration of $0.3 million, comprised of franchise receivables owed to the Company as of the acquisition date. There were no such acquisitions in 2023.
For a potential franchisee, this signifies that the valuation of acquired assets or liabilities might be subject to considerable estimation and could be influenced by factors not readily verifiable by external parties. While the document mentions Level 3 inputs, it does not specify any transfers in or out of Level 1, 2, or 3. Therefore, it is important for prospective franchisees to seek clarification from Del Taco regarding the specifics of these valuations and how they might affect the financial performance of the franchise.