Under what condition will Del Taco reimburse a franchisee's out-of-pocket litigation costs related to the Proprietary Marks?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.2.9.2 Except to the extent that any litigation involving the Proprietary Marks is the result of Franchisee's use of the Proprietary Marks in a manner inconsistent with the terms of this Agreement or involving any other claim against Del Taco, Del Taco agrees to reimburse Franchisee for its out of pocket litigation costs in doing such acts and things, except that Franchisee shall bear the salary costs of its employees, and Del Taco shall bear the costs of any judgment or settlement but only if the claim on which the judgment or settlement is made is only related to the validity or ownership of the mark.
To the extent that such litigation is the result of Franchisee's use of the Proprietary Marks in a manner inconsistent with the terms of this Agreement, Franchisee shall reimburse Del Taco for the cost of such litigation (or, upon Del Taco's written request, pay Del Taco's legal fees directly), including attorney's fees, as well as the cost of any judgment or settlement.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, Del Taco may reimburse a franchisee's out-of-pocket litigation costs related to the Proprietary Marks under specific conditions. Del Taco will reimburse the franchisee for these costs if the litigation is not a result of the franchisee using the Proprietary Marks in a way that violates the franchise agreement. However, the franchisee is responsible for the salary costs of their own employees. Del Taco will cover the costs of any judgment or settlement, but only if the claim is related to the validity or ownership of the mark.
Conversely, if the litigation arises because the franchisee misused the Proprietary Marks, the franchisee must reimburse Del Taco for all litigation costs. This includes attorney's fees, as well as the cost of any judgment or settlement. Del Taco retains the right to direct and control any administrative proceeding or litigation involving the Proprietary Marks, including any settlement.
This clause highlights the importance of adhering to the franchise agreement when using Del Taco's Proprietary Marks. Franchisees must use the marks as authorized to avoid potential liability for litigation costs. It also demonstrates Del Taco's commitment to protecting its brand and Proprietary Marks, while also outlining the circumstances under which it will support its franchisees in legal matters related to those marks.