What constitutes an 'Act of Deception' that could lead to termination of the Fat Shack franchise agreement, and where is it defined?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
If FSI discovers that Franchisee has committed an Act of Deception, as defined in Section 16.5.
16.5. Act of Deception
Notwithstanding anything to the contrary contained in this article, if a breach occurs under Sections 5.1, 5.3, 13.3, or 16.1, due to Franchisee failing to pay or report to FSI any sales pursuant to the terms established hereunder; or if Franchisee underpays any amounts owed to FSI, including amounts discovered in an audit of Franchisee's books and records; or provides reports to FSI that are incomplete, inaccurate or misleading in any respect, and said breach remains uncured for 25 days or more after notice of default has been given, said act shall be deemed a deceptive act by Franchisee to prevent FSI from receiving its fees based on the Gross Sales of Franchisee's FAT SHACK Restaurant (an "Act of Deception").
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, an 'Act of Deception' is defined within Section 16.5 of the agreement. This act is related to breaches occurring under Sections 5.1, 5.3, 13.3, or 16.1, specifically when a franchisee fails to pay or report sales to Fat Shack as required by the franchise terms.
Additionally, an 'Act of Deception' occurs if a Fat Shack franchisee underpays any amounts owed to Fat Shack, including amounts discovered during an audit of the franchisee's financial records. It also includes providing incomplete, inaccurate, or misleading reports to Fat Shack.
To be considered an 'Act of Deception' that could lead to termination, the breach must remain uncured for 25 days or more after Fat Shack provides notice of default. If these conditions are met, the act is then deemed a deceptive act intended to prevent Fat Shack from receiving its fees based on the gross sales of the franchisee's Fat Shack restaurant.