What condition related to sales must a Fat Shack franchisee meet to maintain their franchise agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| Column 1 | Column 2 | Column 3 | Column 4 |
|---|---|---|---|
| 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. |
| Marketing and Promotion Fee1 | None, but we reserve the right to charge up to 1½% of your Gross Sales2 | Payable with the Royalty Fee | We may collect a Marketing and Promotion Fee starting upon 30 days' notice to you. Once commenced, we will debit your bank account for amounts due.3 We may reallocate all or a portion of this fee to a Regional Advertising Program if one is established in your region. You must meet minimum Sales Quota. See Item 12. |
Source: Item 6 — Other Fees (FDD pages 15–18)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees must meet a minimum sales quota to maintain their franchise agreement. The specific details of this sales quota are not outlined in Item 6, but are referenced in Item 12.
Meeting a minimum sales quota is a fairly standard requirement in franchising, intended to ensure the financial viability of the franchise and protect the brand's reputation. Failure to meet the quota could potentially lead to consequences such as closer oversight from Fat Shack, required participation in performance improvement programs, or, in more severe cases, termination of the franchise agreement.
Prospective Fat Shack franchisees should carefully review Item 12 of the FDD and discuss the specifics of the minimum sales quota with the franchisor. Understanding how the quota is calculated, what factors might influence it, and what recourse is available if the quota is not met is crucial for assessing the risks and opportunities associated with the franchise.