Bottom line
- Total investment $1.5M – $3.3M including a $35K franchise fee, 5.0% ongoing royalty.
- Average unit revenue of $1.6M/year (median $1.5M). Estimated payback in 6.3 years.
- Rated STRONG with a risk score of 47/100. SBA loan default rate of 0.0% across 67 loans (below the industry average).
- 10 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Del Taco unit return on the cash you put in?
Unlevered ROIC · per unit
9%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Del Taco units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.9M
on $9.7M purchase
Total debt
$7.7M
SBA $4.8M + senior + seller note
Overview
About
Del Taco franchisees operate quick-service Mexican restaurants focused on affordable, customizable tacos, burritos, and beverage offerings. Day-to-day operations include food preparation, inventory management, staff scheduling, customer service, and compliance with brand standards—while remitting 5% of net sales as royalties to corporate and participating in mandatory marketing fund contributions.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 3 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Del Taco presents a CAUTION-level risk profile due to active litigation involving franchise operations, marketing fund governance, and consumer deception claims, combined with modest unit growth and lack of Item 19 disclosure, offsetting otherwise reasonable unit economics.
Score breakdown · what drove the 47 / 100 rating
- 01HIGHSignificant litigation portfolio spanning wage violations, data breaches, franchise agreement disputes, and marketing fund mismanagement—indicating systemic operational and legal governance issues
- 02MINORMultiple lawsuits alleging deceptive advertising regarding ingredients creates reputational risk and potential regulatory exposure that could impact customer trust and sales
- 03MINORModest unit growth of 9.5% YoY combined with 594 total units suggests a mature/plateauing system; growth rate insufficient to indicate strong franchise model expansion
- 04HIGHLitigation related to alleged mismanagement of marketing funds raises questions about how the 5% royalty is being deployed and whether franchisees receive adequate return on mandatory contributions
- 05MEDHigh initial investment range ($1.5M–$3.3M) paired with average net income of $383K yields ROI of 11.5%–25.5%, which is acceptable but leaves limited margin for error given operational risks
- 06MINORAbsence of Item 19 financial performance representations limits ability to validate whether the $1.6M average revenue and $383K net income figures are achievable or cherry-picked
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
32 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Del Taco · FDD (2025) PDF