In Virginia, when is the development fee deferred for a Del Taco development agreement?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the provisions of Section 5 of the Development Agreement to the contrary, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires Franchisor to defer payment of the development fee and other initial payments owed by the Developer to Franchisor until Franchisor has completed its pre-opening obligations under the Development Agreement.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, in Virginia, the payment of the development fee is deferred until Del Taco has completed its pre-opening obligations under the Development Agreement. This requirement comes from the Virginia State Corporation Commission's Division of Securities and Retail Franchising.
This deferral means that prospective Del Taco developers in Virginia will not have to pay the development fee upfront. Instead, they can wait until Del Taco has fulfilled its responsibilities in preparing the location for opening. This lessens the initial financial burden on the franchisee and potentially reduces the risk if the opening is delayed.
This type of deferral is not universally practiced across all franchise systems or even across all states for a single franchise. It is specific to Virginia due to state regulations. Prospective franchisees should confirm that all pre-opening obligations are clearly defined in the Development Agreement to avoid any ambiguity about when the fee becomes due.