What conditions must a Fat Shack franchisee meet to gain approval for a development agreement transfer, according to Sections 5.3 and 5.4 of the Development Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise or Other Agreement | Summary | |
|---|---|---|---|
| m. | Conditions for our approval of transfer | Section 17.2 of FA; Sections 5.3 and 5.4 of DA | For the Franchise Agreement, the following conditions will apply: Full compliance, transferee qualifies, all amounts due are paid in full, all reports submitted, you have not breached any obligation during 60 day period before you requested our consent to transfer or during period between your request and the effective date of the transfer, transferee signs our then current form of franchise agreement (which may differ materially), transferee and its owners and affiliates do not operate or have ownership interest in competitive business, lease transferred, subordination of amounts due to you and your owners from transferee, completion of training, transfer fee paid, on-site assistance fee paid (if applicable), and sign and deliver other required documents (including release). For the Development Agreement, the following conditions will apply in addition to those listed above: Fee for each undeveloped FAT SHACK Restaurant paid, and concurrent transfer of underlying Franchise Agreements. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–46)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, specifically Item 17, there are several conditions a franchisee must meet to gain approval for a transfer of the Development Agreement, as detailed in Sections 5.3 and 5.4. These conditions are in addition to those required for transferring a Franchise Agreement.
To transfer a Development Agreement, a Fat Shack franchisee must first be in full compliance with the agreement. The potential transferee must also meet Fat Shack's qualifications to become a franchisee. All outstanding payments and required reports must be submitted. The franchisee must not have breached any obligations within 60 days before requesting consent to transfer or during the period between the request and the transfer's effective date. The transferee must sign the current form of the franchise agreement, which may differ from the original. The transferee and its owners cannot operate or have interests in competitive businesses, and the lease must be transferred.
Additional requirements include the subordination of any amounts owed to the current franchisee and its owners by the transferee. The transferee must complete the required training programs. The franchisee must pay a transfer fee and an on-site assistance fee, if applicable, and sign and deliver any other required documents, including a release. Furthermore, for the Development Agreement, the franchisee must pay a fee for each undeveloped Fat Shack Restaurant and ensure the concurrent transfer of the underlying Franchise Agreements.