Under the Development Agreement, can a Del Taco franchisee have any interest in a competitive business within the protected area of any Restaurant?

According to the 2025 Del Taco Franchise Disclosure Document, a franchisee operating under a Development Agreement is restricted from holding any interest in a competitive business within the protected area of any Del Taco Restaurant. This restriction applies to restaurants operated under franchise agreements executed pursuant to the Development Agreement or any other existing Del Taco restaurant. This non-competition covenant is subject to state law, meaning its enforceability and specific terms can vary depending on the state where the franchise is located.

This restriction is in place during the term of the franchise agreement. After the franchise terminates or expires, a similar non-competition covenant applies for a period of two years. During this post-term period, the franchisee is prohibited from having any interest in a competitive business within the protected area of any Del Taco Restaurant operated under a franchise agreement executed pursuant to the Development Agreement or any other existing Del Taco restaurant. Again, this is subject to state law.

These non-competition clauses are standard in franchising to protect the brand and market share of Del Taco. Prospective franchisees should carefully review these clauses and understand the specific restrictions and their duration, as well as how state law may affect their enforceability. It is advisable to seek legal counsel to fully understand the implications of these covenants before entering into a franchise agreement or development agreement with Del Taco.