Under what circumstances must a Del Taco franchisee indemnify Del Taco?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall, to the fullest extent permissible under applicable law, indemnify and hold Del Taco and its affiliates, and each of Del Taco's respective officers, directors, employees, and agents harmless against any and all claims, obligations, and damages arising directly or indirectly from, as a result of, or in connection with this Agreement, the Restaurant, Franchisee's operation of the Restaurant, Franchisee and its employees' actions and inaction, or Franchisee's breach of this Agreement, including those alleged to be caused by Del Taco's negligence, as well as the costs, including attorneys' fees, costs, and expenses (and interest on such fees, costs, and expenses), of defending against them, unless (and then only to the extent that) the claims, obligations, and damages are determined to be caused solely by Del Taco's gross negligence or willful misconduct according to a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, franchisees must indemnify Del Taco and its affiliates, officers, directors, employees, and agents against claims, obligations, and damages. This indemnification extends to issues arising directly or indirectly from the franchise agreement, the restaurant's operation, the franchisee's actions or inactions, or any breach of the agreement. This includes covering costs such as attorneys' fees and related expenses for defending against such claims.
However, the franchisee's obligation to indemnify Del Taco is limited. The franchisee is not responsible for claims, obligations, and damages determined to be caused solely by Del Taco's gross negligence or willful misconduct, as decided by a court or arbitrator with competent jurisdiction. This means that if Del Taco is directly and demonstrably at fault through gross negligence or intentional misconduct, the franchisee is not required to cover the associated costs and damages.
This indemnification clause is a standard inclusion in franchise agreements. It aims to protect Del Taco from liabilities resulting from the franchisee's business operations. Prospective franchisees should carefully consider this clause and understand the scope of their potential financial responsibilities. It is advisable to consult with a legal professional to fully grasp the implications of this indemnification requirement and to assess the risks associated with operating a Del Taco franchise.