Del Taco

Can you provide details on the 3 cases where Del Taco initiated litigation as plaintiff? What were the outcomes and what issues did they involve?

Of the 6 cases initiated against Del Taco, what were the primary allegations or claims, and have any resulted in unfavorable rulings or settlements that could affect franchisee operations?

What is the status of the 2 pending litigation cases, when were they filed, and what are the potential implications for franchisees?

In 2024, the system experienced 18 unit closures versus 5-10 in prior years. Can you explain what drove this spike and whether there are known issues affecting unit viability?

The 32 unit transfers in 2024 is notably higher than prior years. Are these transfers primarily due to franchisees exiting voluntarily, or are there other factors driving this activity?

Given the Risk Factors score of 48 (below the typical range), what specific operational or financial risks should prospective franchisees be aware of?

The Investment score is 18, well below the typical range for this category. Can you clarify what factors contribute to this low score and what hidden costs or investment requirements may not be reflected in the franchise fee?

Why does your franchise agreement specify a 2-mile non-compete radius when the typical range is 5-10 miles? How does this narrower restriction protect franchisees from encroachment?

The initial term is 20 years, significantly longer than the typical 10-15 years. What is the rationale for this extended term, and what protections do franchisees have if circumstances change materially during this period?

Can you explain the renewal terms, particularly the requirement to sign a new franchise agreement and general release as a condition of renewal? What obligations might change in a renewed agreement?

The franchise has only 8 termination causes compared to the typical 15-20 for this category. What situations are not covered as termination causes, and how does this affect franchisor enforcement?

With only 6 renewal conditions versus the typical 7-9, are there any conditions that are not explicitly required for renewal? How does this affect renewal predictability for franchisees?

Median gross sales of $1.54 million exceeds the typical range. Is this median driven by a small number of high-performing units, and what is the interquartile range? What percentage of units meet or exceed this median?

Given the higher median sales figure, what is the average unit volume across the system, and what percentage of franchisees fail to reach the median?

The operational control clause requires all approved vendor purchases and mandatory pricing guidelines. How much leverage do franchisees have in negotiating prices or switching between approved vendors?

What specific pricing guidelines or margin requirements are imposed through the operational control clause, and how frequently do these change?

With territorial protection but no exclusivity, how is encroachment actually prevented in practice, and what remedy does a franchisee have if Del Taco opens a company-operated location in their protected area?

The renewal fee is $35,000 (equal to the initial franchise fee). Are there any circumstances under which this fee could be waived or reduced, or is it non-negotiable at renewal?

Can you provide the dispute resolution process and venue for litigation? Are there mandatory arbitration clauses, and if so, how does this affect a franchisee's ability to contest franchisor decisions?

What is the franchisee failure rate (closures plus terminations) over the last 5 years, and how does this compare to the system's unit growth rate?