What action is the guarantor expected to have completed in relation to the Fat Shack guarantee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
EXHIBIT B TO DEVELOPMENT AGREEMENT
GUARANTY AND ASSUMPTION OF FRANCHISEE'S OBLIGATIONS
- A. In consideration of, and as an inducement to, the execution of the above Development Agreement ("Development Agreement") by FAT SHACK INC. ("FSI"), each of the undersigned hereby personally and unconditionally:
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- Guarantees to FSI and its successors and assigns, for the term of the Development Agreement, including renewals thereof, that franchisee named on the signature page ("Franchisee") shall punctually pay and perform each and every undertaking, agreement and covenant set forth in the Development Agreement; and
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- Agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Development Agreement.
- B. Each of the undersigned waives the following:
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- Acceptance and notice of acceptance by FSI of the foregoing undertaking;
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- Notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed;
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- Protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed;
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- Any right he or she may have to require that any action be brought against Franchisee or any other person as a condition of liability; and
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- Notice of any amendment, modification, deletion or addition of any term or condition of or to any of the obligations hereby guaranteed.
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- Notice of any termination as to future liability of any other guarantor.
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- Any and all other notices and legal or equitable defenses to which he or she may be entitled.
- C. Each of the undersigned consents and agrees that:
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- His or her direct and immediate liability under this guaranty will be joint and several;
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- He or she will render any payment or performance required under the Development Agreement upon demand if Franchisee fails or refuses punctually to do so;
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- His or her liability hereunder will not be contingent or conditioned upon pursuit by FSI of any remedies against Franchisee or any other person; and
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- His or her liability hereunder will not be diminished, relieved or otherwise affected by any amendment, assignment or modification of the Development Agreement or any extension of time,
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the guarantor is expected to have signed a personal and unconditional guarantee to Fat Shack Inc. This guarantee ensures that the franchisee will punctually pay and perform every obligation, agreement, and covenant outlined in either the Development Agreement or the Franchise Agreement, depending on which agreement the guaranty is attached to. The guarantor also agrees to be personally bound by and liable for any breaches of these agreements. This obligation extends for the entire term of the respective agreement, including any renewals.
To further clarify the guarantor's responsibilities, they waive several rights that could potentially mitigate their obligations. These waivers include the right to acceptance and notice of acceptance by Fat Shack, notice of demand for payment or nonperformance, protest and notice of default, the right to require action against the franchisee before pursuing the guarantor, and notice of any changes to the guaranteed obligations. These waivers streamline Fat Shack's ability to seek recourse directly from the guarantor without having to exhaust other avenues first.
The guarantor also consents to specific conditions that reinforce their liability. Their liability is direct, immediate, joint, and several, meaning Fat Shack can pursue any guarantor for the full amount owed. The guarantor must render any payment or performance required under the agreements immediately upon demand if the franchisee fails to do so. The guarantor's liability is not contingent upon Fat Shack pursuing remedies against the franchisee or any other person, and it will not be affected by any amendments, assignments, or modifications to the agreements.
In practical terms, this means that anyone signing as a guarantor for a Fat Shack franchise is taking on a significant financial and legal responsibility. They are essentially vouching for the franchisee's ability to meet all obligations under the franchise agreement and are prepared to cover those obligations themselves if the franchisee defaults. Prospective guarantors should carefully consider the franchisee's financial stability and business acumen before agreeing to sign the guaranty, as their personal assets are at risk.