Del Taco — Litigation & Risk

1. 01HIGHSignificant litigation portfolio spanning wage violations, data breaches, franchise agreement disputes, and marketing fund mismanagement—indicating systemic operational and legal governance issues
2. 02MINORMultiple lawsuits alleging deceptive advertising regarding ingredients creates reputational risk and potential regulatory exposure that could impact customer trust and sales
3. 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
4. 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
5. 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
6. 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 FDD text — not a regulatory or legal classification