Under the Del Taco Guarantee, Indemnification, and Acknowledgment, what obligations of the Franchisee are unconditionally guaranteed to Del Taco?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
As an inducement to Del Taco, LLC ("Del Taco" or "Franchisor") to execute the Del Taco Franchise Agreement between Del Taco and ("Franchisee"), dated , 20 (the "Agreement"), the undersigned jointly and severally, hereby unconditionally guarantee to Del Taco and its successors and assigns that all of Franchisee's monetary and other obligations under the Agreement will be punctually paid and performed.
Upon demand by Del Taco, the undersigned each hereby jointly and severally agree to immediately make each payment required of Franchisee under the Agreement and waive any right to require Del Taco to: (a) proceed against Franchisee for any payment required under the Agreement; (b) proceed against or exhaust any security from Franchisee; (c) pursue or exhaust any remedy, including any legal or equitable relief, against Franchisee; or (d) give notice of demand for payment by Franchisee. Without affecting the obligations of the undersigned under this Guarantee, Del Taco may, without notice to the undersigned, extend, modify, or release any indebtedness or obligation of Franchisee, or settle, adjust, or compromise any claims against Franchisee, and the undersigned each hereby jointly and severally waive notice of same and agree to remain and be bound by any and all such amendments and changes to the Agreement.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the Guarantee, Indemnification, and Acknowledgment agreement stipulates that the guarantor(s) unconditionally guarantee to Del Taco that the franchisee will punctually pay and perform all monetary and other obligations under the Franchise Agreement. This guarantee serves as an inducement for Del Taco to enter into the Franchise Agreement with the franchisee. The guarantor(s) agree to be jointly and severally liable for the franchisee's obligations. This means Del Taco can pursue any one or all of the guarantors for the full amount of the franchisee's debt or non-performance.
Upon demand from Del Taco, the guarantor(s) must immediately make any payment required of the franchisee under the agreement. The guarantor(s) waive any right to require Del Taco to first pursue the franchisee for payment, proceed against any security from the franchisee, or exhaust any legal remedies against the franchisee. Del Taco can modify or release any of the franchisee's obligations without notifying the guarantor(s), and the guarantor(s) still remain bound by the agreement.
This arrangement significantly protects Del Taco by ensuring that there are parties responsible for the franchisee's obligations beyond just the franchisee itself. For a prospective franchisee, this means that anyone signing the Guarantee, Indemnification, and Acknowledgment agreement (often owners or investors) must understand they are taking on a direct and unconditional obligation to ensure the franchisee's compliance with the Franchise Agreement. They should seek legal counsel to fully understand the implications of this guarantee.