Who does the Fat Shack agreement bind and benefit?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
7. BUSINESS RELATIONSHIPS
- 7.1. During the term of this Development Agreement, Franchisee shall be an independent contractor and shall in no way be considered as an agent, partner or employee of FSI. It is understood and agreed that no agency or partnership is created by this Development Agreement. As such, Franchisee has no authority of any nature whatsoever to bind FSI or incur any liability for or on behalf of FSI or to represent itself as anything other than an independent contractor. Notwithstanding any other provisions in this Development Agreement, FSI shall not be responsible for supervising the activities of Franchisee under this Development Agreement.
- 7.2. Franchisee shall indemnify, release, defend and hold FSI, its subsidiaries and affiliates, and its respective shareholders, directors, officers, employees, agents, successors and assignees (the "Indemnified Parties") harmless against, and to reimburse them for all Claims, defined below, any and all third party obligations of Franchisee, and any and all claims, obligations and liabilities directly or indirectly arising out of this Development Agreement or the operation of any FAT SHACK Restaurants. For purposes of this indemnification, "Claims" means all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties, including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses. FSI will have the right to defend any such Claim against it. This indemnity will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Development Agreement.
8. MISCELLANEOUS
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the franchise agreement primarily binds and benefits Fat Shack Franchise Systems, Inc. (FSI) and the franchisee. The franchisee is obligated to develop and operate Fat Shack restaurants in compliance with FSI's standards, as detailed in the Development Agreement. This includes adhering to a development schedule, maintaining continuous operation of a specified number of restaurants, and complying with FSI's image and operational standards. The franchisee must also indemnify FSI against any claims arising from the operation of the Fat Shack restaurant.
Fat Shack (FSI) benefits from the agreement through the franchisee's adherence to brand standards, payment of fees, and the expansion of the Fat Shack brand. FSI also retains significant control over the operation, including the right to approve locations, require renovations, and set business hours. Additionally, FSI has the right to purchase the Fat Shack restaurant upon termination or expiration of the agreement, further securing its interests.
Furthermore, the agreement specifies that the franchisee is an independent contractor and not an agent, partner, or employee of FSI, limiting FSI's liability for the franchisee's actions. FSI also retains the right to market and sell products through other channels and venues, ensuring its ability to generate revenue outside of franchised locations. The agreement is fully transferable by FSI and shall inure to the benefit of FSI's successors and assigns.