What is the consequence of not paying the Successor Franchise Fee for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall only be entitled to exercise its successor franchise rights if Franchisee:
- e. Pays a successor franchise fee ("Successor Franchise Fee") in the amount of $6,000.00 upon each exercise of the successor franchise rights and any other fees set forth in the successor franchise rider to cover FSI's expenses related to reviewing Franchisee's operations and approving the option. The Successor Franchise Fee will be due and payable upon execution of FSI's then current Franchise Agreement and will be nonrefundable under all circumstances once paid. The Successor Franchise Fee is paid in lieu of an additional initial franchise fee;
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, a franchisee must meet certain prerequisites to exercise their rights to a successor franchise. One of these prerequisites is paying a Successor Franchise Fee of $6,000.
If a Fat Shack franchisee fails to pay the Successor Franchise Fee, they will not be entitled to exercise their successor franchise rights. This means the franchisee will not be able to renew their franchise agreement for additional terms, which are three additional terms of five years each.
In addition to paying the Successor Franchise Fee, the franchisee must also execute the current form of the Franchise Agreement, not be in default of the existing agreement, agree to upgrade and remodel the Fat Shack restaurant if required, and complete a refresher operations training program. Meeting all these conditions, including paying the Successor Franchise Fee, is essential for a Fat Shack franchisee to continue operating their franchise beyond the initial term.