Does the Fat Shack certificate specify any conditions under which the guarantee is not valid?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisees
If Franchisee is a corporation, partnership, limited liability company or other business entity, the following additional conditions must be met, along with any other conditions as may be established by FSI for entity franchisees:
- a. Contemporaneously with the business entity acquiring the franchise rights, thereafter upon the issuance or transfer of any ownership interests in the business entity or the appointment or election of any person as director, officer, member or manager of the business entity, and at any other time requested by FSI, the shareholders, members, partners, other owners, directors, officers, managers (as applicable), and any other individuals as designated by FSI will execute the Guaranty and Assumption of Franchisee's Obligations attached hereto as Exhibit V and incorporated herein by reference, personally guaranteeing full payment and performance of Franchisee's obligations to FSI and individually undertaking to be bound, jointly and severally, by all the terms of this Agreement.
- b.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, if the franchisee is a business entity, certain individuals such as shareholders, members, partners, owners, directors, officers, and managers, as designated by Fat Shack, must execute a Guaranty and Assumption of Franchisee's Obligations. This agreement ensures they personally guarantee the franchisee's obligations to Fat Shack. This guarantee is required when the business entity initially acquires the franchise rights, and again upon any changes in ownership or management.
Furthermore, the FDD states that Fat Shack will not approve a proposed transfer if the franchisee (and its owners) is not in full compliance with the Franchise Agreement. This includes ensuring all due amounts are paid, all required reports and statements have been submitted, and no violations of the agreement have occurred within a specified period.
Therefore, the guarantee's validity is contingent upon these individuals remaining compliant with the franchise agreement and fulfilling the obligations outlined in the Guaranty and Assumption of Franchisee's Obligations. Failure to meet these conditions could potentially invalidate the guarantee.