Under what circumstances does the 'Post-Term Period' commence for a Del Taco obligee?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
(c) Obligee covenants and agrees that during the Post-Term Period (defined below), except as otherwise approved in writing by Del Taco, Obligee shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, or entity, own, maintain, operate, engage in, or have any interest in any Competitive Business which is, or is intended to be, located: (a) within the Protected Area of the Restaurant or (b) within two (2) miles of any other Del Taco restaurant owned and/or operated or then under construction by Del Taco or any other franchisee or licensee of Del Taco as of the time that the obligations under this Section commence.
(d) As used in this Agreement, the term "Post-Term Period" shall mean a continuous uninterrupted period of two (2) years from the date of: (a) a transfer permitted under Section 12.3 of the Franchise Agreement with respect to Obligee; and/or (b) termination of Obligee's employment with, and/or ownership interest in, Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 59–325)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the "Post-Term Period" for an obligee begins under specific conditions related to transfers and employment. This period triggers certain restrictions and obligations for the obligee, primarily concerning competitive business activities.
The Post-Term Period is defined as a continuous, uninterrupted duration of two years. This two-year period starts from either of two dates: first, the date of a transfer permitted under Section 12.3 of the Franchise Agreement, which involves the obligee; or second, the date of the termination of the obligee's employment with, and/or ownership interest in, the Del Taco franchisee.
During this Post-Term Period, the obligee is restricted from owning, maintaining, operating, engaging in, or having any interest in a Competitive Business. A Competitive Business is defined as one that offers one or more Mexican or similar style menu items and operates in a quick service, fast food, or fast casual format. This restriction applies to businesses located within the Protected Area of the Restaurant or within two miles of any other Del Taco restaurant owned and/or operated or then under construction by Del Taco or any of its other franchisees or licensees. These restrictions can be waived if Del Taco provides written approval.