What financial analysis is a Fat Shack franchisee required to perform?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
anchisee Reports
Franchisee shall, at Franchisee's expense, provide to FSI financial and accounting reports in the manner and form FSI requires, including:
- a. Any reports, including sales reports by product category, data, information and other supporting records on such forms and at such frequency as required by FSI from time to time;
- b. Within 15 days after the end of each month, an income statement of Franchisee's FAT SHACK Restaurant for such month and for the fiscal year to date, prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied, in FSI's recommended format; and
- c. Within 90 days after the end of Franchisee's fiscal year, which shall be the calendar year, an income statement and balance sheet of Franchisee's FAT SHACK Restaurant for such fiscal year (reflecting all year-end adjustments), and a statement of changes in cash flow of the FAT SHACK Restaurant, prepared in accordance with GAAP, consistently applied, and in FSI's recommended format. FSI reserves the right to require that Franchisee have reviewed financial statements prepared on an annual basis by an accountant.
All financial statements required by this Article 16 shall be in on a form acceptable to FSI. If Franchisee fails to provide such financial statements more than two times in any 12-month period, then in addition to any other remedies, FSI may require Franchisee to use a bookkeeping service as designated by FSI.
16.2. Financial Records Use and Access
FSI reserves the right to disclose data derived from all financial and accounting reports received from Franchisee. All financial information transmitted by Franchisee to FSI pursuant to this Agreement shall be owned by FSI, with no duty on the part of FSI to account to Franchisee with respect to the use and exploitation of the same. Franchisee expressly authorizes FSI to utilize this information to prepare a financial performance representation, to release this information as necessary to substantiate any financial performance representation made by FSI, to share such information in summary form as FSI deems necessary or desirable with other franchisees at any annual convention or other franchise business meetings, and to share such information in any other manner and with any other parties that FSI deems appropriate without obtaining any further written consent of Franchisee.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees must provide Fat Shack Inc. (FSI) with specific financial and accounting reports. These reports include monthly income statements within 15 days after each month's end, covering both the month and the fiscal year-to-date. These statements must adhere to generally accepted accounting principles (GAAP) and follow FSI's recommended format.
Additionally, franchisees are required to submit annual financial statements within 90 days after the end of their fiscal year, which aligns with the calendar year. This annual submission must include an income statement, a balance sheet, and a statement of changes in cash flow, all prepared in accordance with GAAP and FSI's format. Fat Shack retains the right to demand that these annual financial statements undergo review by an accountant.
These financial reporting requirements are crucial for Fat Shack to monitor the financial health and performance of its franchise locations. If a franchisee fails to provide these statements more than twice in a 12-month period, Fat Shack may require the franchisee to use a bookkeeping service designated by FSI. Furthermore, Fat Shack reserves the right to disclose and utilize the data from these reports, including sharing it with other franchisees or in financial performance representations.
For a prospective Fat Shack franchisee, these requirements mean a commitment to maintaining accurate and timely financial records. They also need to be prepared to potentially incur the cost of an accountant's review and the possibility of being mandated to use a specific bookkeeping service if reporting obligations are not met. The franchisee should also understand that Fat Shack has broad rights to use and share the franchisee's financial data.