When exercising the option, how long does Fat Shack Franchisee have to select their appraiser?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Except in the case of the grant of successor franchise rights under Article 18, upon termination or expiration of this Agreement for any reason, FSI shall have the option to purchase the FAT SHACK Restaurant, or a portion of the assets of the FAT SHACK Restaurant, which may include, at FSI's option, all of Franchisee's interest, leasehold or otherwise, in and to the real estate upon which the FAT SHACK Restaurant is located, and all buildings and other improvements related thereto. The purchase price for the assets to be transferred will be the fair market value of the assets, excluding any good will associated with the Marks, as mutually determined by FSI and Franchisee, or if they are unable to mutually agree on the purchase price, by FSI and Franchisee each choosing one independent appraiser who, in turn, choose a third independent appraiser, with the third appraiser's determination being binding upon the parties. The purchase price for the assets will be adjusted by setting off any amount then owing by Franchisee to FSI, including any amounts paid by FSI to cure Franchisee's defaults with third parties such as landlords (the decision to pay such cure amounts to be in the sole and absolute discretion of FSI). FSI and Franchisee shall each pay the fees and expenses of their chosen appraisers and they shall evenly split the fees and expenses of the third appraiser. The following additional terms shall apply to FSI's exercise of this option:
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, upon termination or expiration of the franchise agreement, Fat Shack has the option to purchase the Fat Shack restaurant. The purchase price will be the fair market value of the assets, excluding any goodwill associated with the marks.
If Fat Shack and the franchisee cannot agree on the purchase price, both parties will choose an independent appraiser. These two appraisers will then choose a third independent appraiser, whose determination will be binding. Fat Shack and the franchisee will each pay the fees and expenses of their chosen appraisers and split the fees and expenses of the third appraiser.
The FDD does not specify a time limit for the franchisee to select their appraiser. It only states that if Fat Shack and the franchisee cannot agree on the purchase price, they will each choose an appraiser. A prospective franchisee should clarify the expected timeframe for selecting an appraiser with Fat Shack to ensure a smooth process if the purchase option is exercised.