Within what geographic radius of a Del Taco restaurant am I prohibited from operating a competitive business after the Del Taco franchise terminates or expires?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in the Agreement | Summary |
|---|---|---|
| n. Our right of first refusal to acquire your business | 12.6 | We have an option for 30 days to purchase upon same terms and conditions offered to the third party. |
| o. Our option to purchase your business | 12.6 | We have an option to purchase your business upon the termination or expiration of your Franchise Agreement. |
| p. Your death or disability | 12.7 and 12.8 | We will not withhold consent unreasonably to a transfer to a third party within 6 months, provided the transferee meets our general conditions of transfer. |
| q. Non-competition covenants during the term of the franchise | 10.5 | You cannot use the Del Taco System or any other names, marks, systems, logotypes, symbols or foodstuffs provided by us or an approved supplier in connection with another Restaurant; you cannot operate any “competitive business”, which means a Restaurant or food service business that offers one or more Mexican or similar style menu items, and is operated in a quick service, fast food, or fast casual format. (subject to state law) |
| r. Non-competition | 10.6 | For a period of two years, you cannot operate a |
| covenants after the | competitive business within two miles of your | |
| franchise terminates or | original location or any other existing Del Taco | |
| expires | Restaurant. (subject to state law) |
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, if your franchise terminates or expires, you are restricted from operating a competitive business within a specific geographic area. Generally, this non-compete period lasts for two years, and the restricted area extends two miles from your original Del Taco location or any other existing Del Taco restaurant. A competitive business is defined as a restaurant or food service that offers one or more Mexican or similar style menu items and operates in a quick service, fast food, or fast-casual format. These restrictions are subject to state law, which may modify or supersede the terms outlined in the franchise agreement. For example, in Indiana, the non-compete area is limited to the exclusive territory granted in the franchise agreement or, if no exclusive territory is granted, to an area of reasonable size, up to a 50-mile radius of the Del Taco location.
This non-compete clause is designed to protect Del Taco's market share and brand recognition by preventing former franchisees from directly competing with the system shortly after leaving. The two-mile radius aims to prevent franchisees from leveraging their knowledge of the Del Taco system and customer base to benefit a competing business in close proximity. However, the enforceability and specific terms of these clauses can vary significantly depending on state laws, which often seek to balance the franchisor's need for protection with the franchisee's right to earn a living.
Prospective franchisees should be aware of these post-termination restrictions and carefully consider their implications. It is essential to understand how state laws may modify the standard non-compete terms and to assess the potential impact on future business opportunities. Consulting with an attorney experienced in franchise law is advisable to fully understand the scope and enforceability of the non-compete agreement in your specific state and circumstances. This due diligence can help you make an informed decision about investing in a Del Taco franchise and plan for your business activities after the franchise term.