Under what condition is a Del Taco franchisee NOT required to indemnify Del Taco for claims?
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, a franchisee is generally required to indemnify Del Taco and its affiliates against claims, obligations, and damages arising from the franchise agreement, the restaurant's operation, or the franchisee's actions or inactions. This indemnification extends to costs, including attorney's fees, associated with defending against such claims. This means that if someone sues Del Taco because of something the franchisee or their employees did (or didn't do), the franchisee is responsible for covering Del Taco's legal costs and any resulting damages.
However, the franchisee's obligation to indemnify Del Taco is not absolute. The franchisee is not required to indemnify Del Taco to the extent that the claims, obligations, and damages are determined to be caused solely by Del Taco's gross negligence or willful misconduct. This determination must be made by a final, unappealable ruling from a court or arbitrator with competent jurisdiction.
In practical terms, this means a Del Taco franchisee has significant financial responsibility for issues arising from their restaurant's operation. However, they are protected from having to cover Del Taco's own mistakes or intentional wrongdoing, but only if they can prove in court that Del Taco was grossly negligent or engaged in willful misconduct. This protection is contingent on a legal determination, which can be a costly and time-consuming process.