What is a condition of FSI's approval of a transfer of the Fat Shack Development Agreement regarding the franchisee's interest?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
A condition of FSI's approval of a transfer of this Development Agreement is that Franchisee must transfer all of its interest under this Development Agreement, and shall not be permitted to transfer any portion of this Development Agreement separate and apart from the remainder of this Development Agreement.
Any transfer shall include the rights to all Franchise Agreements entered into between FSI and Franchisee hereunder.
Franchisee and the transferee shall comply with the requirements under each Franchise Agreement entered into between FSI and Franchisee for the transfer of each such Franchise Agreement, including the payment of the applicable transfer fee for each Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a condition for FSI's approval of a transfer of the Development Agreement is that the franchisee must transfer all of their interest under the Development Agreement. The franchisee is not allowed to transfer only a portion of the Development Agreement separately from the rest of it.
This means that if a Fat Shack franchisee wants to sell their development rights, they must sell the entire package. They cannot, for example, sell the rights to develop restaurants in only certain areas while retaining the rights to others. This ensures that Fat Shack maintains control over the development and expansion of the franchise.
Furthermore, any transfer must include the rights to all Franchise Agreements already entered into between FSI and the franchisee. Both the franchisee and the transferee must also comply with the requirements for transferring each individual Franchise Agreement, including paying the applicable transfer fee for each one. This comprehensive approach ensures a clean and complete transfer of all associated rights and obligations.