Besides a written agreement, how else can Fat Shack modify the Franchise Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
CELLANEOUS PROVISIONS
24.1. Modification
- a. This Agreement may only be modified upon execution of a written agreement between FSI and Franchisee or, at FSI's option, upon notice of the approval of a Super-Majority as defined in Section 24.1.b below. Unless prohibited by law or waived by FSI, Franchisee must provide a general release of any and all claims against FSI if Franchisee requests and FSI consents to modify any provisions of this Agreement after it has been signed.
- b. This Agreement may be modified by FSI at its option whenever FSI and a Super-Majority, as hereinafter defined, of franchisees of FSI agree to the modification. A "Super-Majority" of FSI franchisees shall consist of the owners of at least 75 percent of all FAT SHACK Restaurants, or, if only a portion of FAT SHACK Restaurants are affected by the modification, at least 75 percent of those FAT SHACK Restaurants affected by the modification. Whenever a modification is approved by a Super-Majority, FSI may elect to treat the modification as effective to all franchisees or the applicable group thereof, including Franchisee, to the same extent and in the same manner as if the modification was unanimously approved by all applicable Franchisees, and regardless of whether Franchisee may or may not desire to be
bound by the modification. FSI shall provide Franchisee with notice of any modification to this Agreement based on a Super-Majority approval at least 60 days prior to the date such modification is to be effective. By signing this Agreement, Franchisee appoints the officers of FSI as its attorneys in fact with irrevocable power and authority to execute any such modification so approved.
- c. Franchisee acknowledges that FSI may modify its standards and specifications and operating, marketing, and other policies and procedures set forth in the Operations Manual unilaterally under any conditions and to the extent in which FSI, in its sole discretion, deems necessary, and Franchisee shall be bound by such modifications. These modifications may include regional and local variations. Franchisee may be obligated to invest additional capital in Franchisee's FAT SHACK Restaurant and incur higher operating costs based on these periodic modifications.
- d. FSI has the right to vary the franchise agreement and any standards, specifications, and techniques for a particular FSI franchisee based on the circumstances related to the franchisee, its area or territory, or any other condition. Franchisee shall not be entitled to require FSI to grant Franchisee a similar variation.
24.2. Entire Agreement
This Agreement contains the entire agreement between the parties and supersedes any and all prior agreements concerning the subject matter hereof.
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 can be modified in two ways. First, Fat Shack and the franchisee can execute a written agreement to modify it. Second, Fat Shack can modify the agreement if a "Super-Majority" of franchisees agree to the modification. A Super-Majority consists of owners of at least 75% of all Fat Shack restaurants, or if the modification only affects a portion of restaurants, at least 75% of those affected restaurants.
If a Super-Majority approves a modification, Fat Shack can elect to make the change effective for all franchisees, regardless of whether an individual franchisee desires to be bound by it. Fat Shack must provide franchisees with notice of any modification based on Super-Majority approval at least 60 days before the effective date. By signing the Franchise Agreement, the franchisee appoints the officers of Fat Shack as their attorneys-in-fact with the power to execute any such modification.
This arrangement means that a prospective Fat Shack franchisee could be bound by changes to the Franchise Agreement even if they do not agree with them, as long as 75% of franchisees (or the relevant subset) approve the changes. This is a significant point for potential franchisees to consider, as it reduces their individual control over the terms of their franchise agreement and gives substantial power to the franchisor and a majority of fellow franchisees. Franchisees should carefully consider the implications of this clause and discuss it with legal counsel before signing the agreement.
Fat Shack may also modify its standards, specifications, and operating, marketing, and other policies and procedures set forth in the Operations Manual unilaterally under any conditions and to the extent in which Fat Shack, in its sole discretion, deems necessary, and the Franchisee shall be bound by such modifications. These modifications may include regional and local variations, and the Franchisee may be obligated to invest additional capital in Franchisee's Fat Shack Restaurant and incur higher operating costs based on these periodic modifications. Fat Shack also has the right to vary the franchise agreement and any standards, specifications, and techniques for a particular Fat Shack franchisee based on the circumstances related to the franchisee, its area or territory, or any other condition, and the Franchisee shall not be entitled to require Fat Shack to grant Franchisee a similar variation.