Is the continued operation of the Fat Shack Restaurant a condition to closing the purchase by FSI?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that it shall be obligated to operate the FAT SHACK Restaurant, according to the terms of this Agreement, during the period in which FSI is deciding whether to exercise its option to purchase and until the closing takes place, and that a condition to closing is that the FAT SHACK Restaurant has remained open during that time period.
FSI may decide not to exercise its option to purchase at any time before closing if it determines that any of the conditions noted above have not been or cannot be satisfied.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the continued operation of the Fat Shack restaurant is a condition for closing the purchase by FSI. The franchisee is obligated to operate the Fat Shack Restaurant according to the terms of the agreement while FSI decides whether to exercise its option to purchase and until the closing takes place.
This means that if a franchisee ceases operation of the Fat Shack restaurant during the period when FSI is considering the purchase or before the actual closing, FSI may choose not to proceed with the purchase. This condition protects FSI's interests by ensuring that the restaurant remains a viable business up to the point of sale.
This requirement is fairly standard in franchise agreements where a franchisor has a right of first refusal or an option to purchase the franchise back. It ensures that the business maintains its value and operational integrity should the franchisor decide to exercise its purchase option. For a franchisee, this means they must maintain operations as usual, even if they know FSI might buy the restaurant.