What is the basis for calculating the Fat Shack Royalty fee payment each week?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty1 | 6% of your Gross Sales2 | Payable weekly on Tuesday of each week based on the prior week's Gross Sales | The Royalty is for the ongoing grant of the rights to use the Marks and Licensed Methods, and on-going support. We will debit your bank account for the Royalty.3 You must meet minimum Sales Quota. See Item 12. |
- 2 "Gross Sales" are defined as sales of any kind for all services or products purchased from or through your FAT SHACK Restaurant, including sales made for cash or upon credit, or partly for cash and partly for credit, regardless of collection of charges for which credit is given, regardless of whether sales are conducted in compliance with or in violation of the terms of the Franchise Agreement, and regardless of whether sales occur at the site of your FAT SHACK Restaurant or off-site, but excluding discounts, sales taxes, or other similar taxes and credits. "Gross Sales" includes delivery fees and revenue from the redemption of FAT SHACK gift certificates, customer loyalty cards, gift cards and other prepaid cards. "Gross Sales" also includes the fair market value of any services or products you receive in barter or exchange for your products and services.
Source: Item 6 — Other Fees (FDD pages 15–18)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the royalty fee is calculated as 6% of Gross Sales, payable weekly on Tuesday. The payment is based on the prior week's Gross Sales. Fat Shack will debit the franchisee's bank account for the royalty fee. Franchisees must also meet a minimum Sales Quota, as detailed in Item 12 of the FDD.
Gross Sales are defined as sales of any kind for all services or products purchased from or through your FAT SHACK Restaurant, including sales made for cash or upon credit, or partly for cash and partly for credit, regardless of collection of charges for which credit is given, regardless of whether sales are conducted in compliance with or in violation of the terms of the Franchise Agreement, and regardless of whether sales occur at the site of your FAT SHACK Restaurant or off-site, but excluding discounts, sales taxes, or other similar taxes and credits. Gross Sales includes delivery fees and revenue from the redemption of FAT SHACK gift certificates, customer loyalty cards, gift cards and other prepaid cards. Gross Sales also includes the fair market value of any services or products you receive in barter or exchange for your products and services.
This means that a Fat Shack franchisee needs to be prepared to pay 6% of their total revenue (excluding discounts, sales taxes, and similar taxes) each week. This includes all sales, whether in cash, credit, delivery fees, gift certificate redemptions, or even the fair market value of bartered services. The franchisee must ensure they have sufficient funds in their bank account for Fat Shack to debit the royalty payment each Tuesday. Failing to meet the minimum sales quota could also have implications for the franchisee, as specified in Item 12.