In the event of a conflict of laws, which law prevails for Fat Shack franchises?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
The United States Federal Arbitration Act shall govern all questions about the enforceability of Sections 22.1 and 22.2 and the confirmation of any arbitration awards pursuant to such procedures, and no arbitration issues are to be resolved pursuant to any other statutes, regulations or common law. Otherwise, except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et seq.) or other United States federal law, this Agreement shall be interpreted under the laws of the State of Colorado and any dispute between the parties shall be governed by and determined in accordance with the internal substantive laws, and not the laws of conflict, of the State of Colorado, which laws shall prevail in the event of any conflict of law. Notwithstanding the foregoing, the parties agree that the Colorado Consumer Protection Act (COLO. REV. STAT. ANN. Sections 6-1-101, et seq.) shall not apply to this Agreement or any disputes between the parties. Franchisee and FSI have negotiated regarding a forum in which to resolve any disputes that arise between them and have agreed to select a forum in order to promote stability in their relationship. Therefore, if a claim is asserted in any legal proceeding not subject to mandatory arbitration, as specified in Section 22.1, involving Franchisee, and the Franchisee Affiliates, on the one side, and FSI and the FSI Affiliates, on the other side, both parties agree that the exclusive venue for disputes between them shall be in the state and federal courts of Colorado, and each waive any objection either may have to the personal jurisdiction of or venue in the state and federal courts of Colorado. Notwithstanding the foregoing, any legal proceeding by FSI or any FSI Affiliate not subject to mandatory arbitration may be brought in any court of competent jurisdiction in the country, state, province, or other geographic area in which the FAT SHACK Restaurant is located or in which Franchisee or any Franchisee Affiliate resides or owns assets. IF A CLAIM MAY BE BROUGHT IN COURT, THEN FSI, THE FSI AFFILIATES, FRANCHISEE AND THE FRANCHISEE AFFILIATES EACH WAIVE THEIR RIGHTS TO A TRIAL BY JURY.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the laws of the State of Colorado govern the interpretation of the franchise agreement and any disputes between the parties, except to the extent governed by the United States Trademark Act of 1946 or other United States federal law. Specifically, Colorado law will prevail in the event of any conflict of law. However, the Colorado Consumer Protection Act does not apply to the agreement or any disputes.
This means that if there is a disagreement about how to interpret the franchise agreement, or if there is a legal dispute between Fat Shack and the franchisee, Colorado law will be used to resolve the issue, unless federal law applies. This is a common practice in franchising, as it provides clarity and predictability for both parties. However, franchisees should be aware that they may be subject to laws that are different from those in their own state.
For prospective Fat Shack franchisees, this clause means disputes will likely be resolved in Colorado, potentially requiring travel and legal representation familiar with Colorado law. Franchisees should also note the exclusion of the Colorado Consumer Protection Act, which might otherwise offer certain protections. The FDD also specifies that the United States Federal Arbitration Act governs enforceability and confirmation of arbitration awards related to mandatory arbitration clauses within the agreement.