Where can I find the specific provisions regarding renewal, termination, transfer, and dispute resolution for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 17
RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
This table lists certain important provisions of the Franchise Agreement and related agreements. You should read these provisions in the exhibits attached to this Disclosure Document.
THE FRANCHISE RELATIONSHIP
| Provision | Section in Franchise or | Summary | ||
|---|---|---|---|---|
| Other Agreement | ||||
| a. Length of the franchise term | Section 18.1 of Franchise Agreement (“FA”); Article 4 of Development Agreement (“DA”) | 7 years for the Franchise Agreement. For the Development Agreement, the term extends until the earlier of the date that you sign the Franchise Agreement for the final FAT SHACK Restaurant to be developed under the Development Agreement or the deadline in the development schedule for signing that Franchise Agreement. | ||
| b. Renewal or extension of the | Section 18.3 of FA | Option to renew for up to three additional 5 year terms | ||
| term | after the initial term. | |||
| c. Requirements for you to renew or extend | Sections 18.3 and 18.4 of FA | Written notice at least 180 days before expiration, sign then-current form of Franchise Agreement (which may contain materially different terms from your original contract), sign Successor Franchise Rider in the form attached as Attachment F containing a release, be in compliance with Franchise Agreement, pay fee, and renovate (if applicable). | ||
| d. Termination by you | Section 19.1 of FA; Section 4.2 of DA | For the Franchise Agreement: On written notice if you notify us within 30 days of the breach and we materially fail to comply and fail to cure within 60 days after notice or such additional time reasonably needed to cure (subject to applicable state law). For the Development Agreement: On 60 days’ written notice by you for any reason (subject to applicable state law). | ||
| e. Termination by us without | Not Applicable | We may not terminate the Franchise Agreement or | ||
| cause | Development Agreement without cause. | |||
| f. Termination by us with cause | Sections 19.2, 19.3, 19.4, and 19.5 of FA; Section 4.3 and 4.4 of DA | We can terminate only if you commit any one of several listed violations. |
| Provision | Section in Franchise or | Summary | ||
|---|---|---|---|---|
| Other Agreement | ||||
| t. Integration/merger clause | Section 24.2 of FA; Section 8.7 of DA | Only terms of the Franchise Agreement and other related written agreements are binding (subject to state law). Any representations or promises outside of this Disclosure Document, the Franchise Agreement, and other related written agreements may not be enforceable. Nothing in the Franchise Agreement or in any other related written agreement is intended to disclaim any representations made by us in this Disclosure Document. | ||
| u. Dispute resolution by | Article 22 of FA; Section 8.1 of | Arbitration or litigation in Denver, Colorado (subject to | ||
| arbitration or mediation | DA | state law). | ||
| v. Choice of forum | Section 22.5 of FA; Section 8.1 of DA | Arbitration or litigation in Denver, Colorado (subject to state law). | ||
| w. Choice of law | Section 22.5 of FA; Section 8.3 of DA | Except for federal law, Colorado law applies (subject to applicable state law). |
| Provision | Section in Franchise or Other Agreement | Summary | |
|---|---|---|---|
| m. | Conditions for our approval of transfer | Section 17.2 of FA; Sections 5.3 and 5.4 of DA | For the Franchise Agreement, the following conditions will apply: Full compliance, transferee qualifies, all amounts due are paid in full, all reports submitted, you have not breached any obligation during 60 day period before you requested our consent to transfer or during period between your request and the effective date of the transfer, transferee signs our then current form of franchise agreement (which may differ materially), transferee and its owners and affiliates do not operate or have ownership interest in competitive business, lease transferred, subordination of amounts due to you and your owners from transferee, completion of training, transfer fee paid, on-site assistance fee paid (if applicable), and sign and deliver other required documents (including release). |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–46)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, Item 17 and the tables within it summarize key provisions of the Franchise Agreement and related agreements, covering renewal, termination, transfer, and dispute resolution. It is important to read the full provisions in the exhibits attached to the Disclosure Document.
Specifically, the tables in Item 17 outline the length of the franchise term, conditions for renewal or extension, your termination rights, Fat Shack's termination rights, conditions for transfer approval, rights of first refusal, and options to purchase the business. These tables also address what happens in the event of death or disability, non-competition covenants, modification of the agreement, integration clauses, dispute resolution methods, choice of forum, and choice of law. The tables refer to specific sections within the Franchise Agreement (FA) and Development Agreement (DA) where these provisions are detailed.
For instance, the initial franchise term is 7 years per Section 18.1 of the FA. You have the option to renew for up to three additional 5-year terms, as detailed in Section 18.3 of the FA. To renew, you must provide written notice at least 180 days before expiration, sign the then-current form of the Franchise Agreement, sign a Successor Franchise Rider, be in compliance with the Franchise Agreement, pay a fee, and renovate if applicable, according to Sections 18.3 and 18.4 of the FA.
Dispute resolution is addressed in Article 22 of the FA and Section 8.1 of the DA, stipulating arbitration or litigation in Denver, Colorado, subject to state law. Colorado law governs the agreement, except for federal law, as stated in Section 22.5 of the FA and Section 8.3 of the DA. Item 17 also notes that certain states have statutes that may supersede the Franchise Agreement, particularly in the areas of termination and renewal, and refers to the State Addenda attached as Attachment L.