What conditions regarding compliance with the current franchise agreement must a Fat Shack franchisee meet to be entitled to exercise successor franchise rights?

According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee's eligibility to exercise successor franchise rights hinges on their compliance with the existing franchise agreement. Specifically, the franchisee must not be in default or under notification of breach of the agreement at the time they provide notice of their intent to renew, as outlined in Section 18.3. Furthermore, they must have maintained compliance with all provisions of the agreement throughout the current term, including timely payment of all royalty fees and other payments.

Fat Shack defines "compliance" as not having received more than three written notifications of breach from Fat Shack during the current franchise term. This requirement emphasizes the importance of consistent adherence to the franchise agreement's terms to maintain eligibility for renewal.

In addition to compliance with the franchise agreement, the franchisee must also execute the form of Franchise Agreement then in use by Fat Shack, which may have terms substantially different than those set forth in the current agreement. The franchisee must also agree to upgrade and remodel the Fat Shack Restaurant at the franchisee's sole expense to conform with the then-current Operations Manual requirements and execute a successor franchise rider, including a general release of any and all claims against Fat Shack. The franchisee must also pay a $6,000 successor franchise fee upon each exercise of the successor franchise rights and successfully complete a refresher operations training program.