Under what circumstances will a Del Taco franchisee be required to reimburse Del Taco for the costs of an inspection or audit?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
any report to Del Taco, then Franchisee shall immediately pay Del Taco, in the event of an understatement, the amount understated upon demand, in addition to interest from the date such amount was due until paid, at the rate of one and one half percent (1.5%) per month, or the maximum rate permitted by law, whichever is less. If an inspection is necessitated because Franchisee fails to timely provide Sales Reports or if an inspection discloses an understatement in any report by Franchisee of two percent (2%) or more, Franchisee shall, in addition, reimburse Del Taco for any and all costs and expenses connected with the inspection (including, without limitation, travel, lodging and wages expenses, and reasonable accounting and legal costs). The foregoing remedies shall be in addition to any other remedies Del Taco may have.
- 7.5 Data.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, a franchisee may have to reimburse Del Taco for inspection costs under specific circumstances. If a Del Taco franchisee fails to provide sales reports on time, necessitating an inspection, they will be responsible for reimbursing Del Taco for all associated costs. These costs include travel, lodging, wages, and reasonable accounting and legal fees.
Additionally, if an inspection reveals that a franchisee has understated any report by two percent or more, the franchisee must also reimburse Del Taco for all inspection-related expenses. This provision ensures that franchisees are accurate and timely in their financial reporting to Del Taco.
Furthermore, Del Taco may conduct follow-up inspections, and the franchisee is responsible for reimbursing Del Taco for all costs and expenses, including labor and travel, incurred after the first follow-up inspection. Del Taco may also assess a reinspection fee of $500 per visit, in addition to cost reimbursement, which the franchisee must pay within 15 days of receiving an invoice. These measures incentivize franchisees to maintain compliance and address any issues identified during inspections promptly.