In a dispute between Fat Shack and a franchisee, who is responsible for paying attorneys' fees?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.2. Franchisee shall indemnify, release, defend and hold FSI, its subsidiaries and affiliates, and its respective shareholders, directors, officers, employees, agents, successors and assignees (the "Indemnified Parties") harmless against, and to reimburse them for all Claims, defined below, any and all third party obligations of Franchisee, and any and all claims, obligations and liabilities directly or indirectly arising out of this Development Agreement or the operation of any FAT SHACK Restaurants. For purposes of this indemnification, "Claims" means all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties, including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses. FSI will have the right to defend any such Claim against it. This indemnity will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Development Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the franchisee is responsible for covering attorney's fees under specific circumstances. The franchisee is required to indemnify, release, defend, and hold harmless Fat Shack and its affiliates from any third-party obligations and claims arising from the Development Agreement or the operation of any Fat Shack restaurants. This means that if a claim is made against Fat Shack due to the franchisee's actions or business operations, the franchisee must cover all associated costs.
The definition of "Claims" includes all obligations, damages, and costs reasonably incurred in defending against any claim. This explicitly includes reasonable accountants', attorneys', and expert witness fees, costs of investigation, court costs, other litigation expenses, and travel and living expenses. Fat Shack retains the right to defend any such claim.
This obligation extends beyond the term of the Development Agreement, remaining in effect even after the agreement expires or is terminated. Therefore, a prospective Fat Shack franchisee should be aware of this significant financial responsibility, as they could be liable for substantial legal fees and costs if a claim arises against Fat Shack related to their franchise operations.