Does the Fat Shack Franchise Agreement contain provisions about renewal, termination, transfer and dispute resolution?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 17: Renewal, Termination, Transfer, and Dispute Resolution]
| 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 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). For the Development Agreement, the following conditions will apply in addition to those listed above: Fee for each undeveloped FAT SHACK Restaurant paid, and concurrent transfer of underlying Franchise Agreements. |
| n. | Our right of first refusal to acquire your business | Section 17.4 of FA; Section 5.6 of DA | For 30 day period, we have right to match offer. |
| o. | Our option to purchase your business | Section 19.6 of FA | Fair market value of your FAT SHACK Restaurant, less the amount of the goodwill associated with our Marks. |
| p. | Your death or disability | Section 17.6 of FA | Franchise must be assigned to approved buyer within 120 days (or longer if required by probate proceedings); there must at all times be a General Manager at the FAT SHACK Restaurant. |
| q. | Non-competition covenants during the term of the franchise | Section 21.1 of FA; Article 6 of DA | No involvement in Competitive Business wherever located or operating, subject to state law. |
| r. | Non-competition covenants after the franchise is terminated or expires | Sections 21.2 and 21.3 of FA; Article 6 of DA | No interest in Competitive Business for 2 years within 10 miles of the former Restaurant Location or any other FAT SHACK Restaurant, subject to state law. |
| s. | Modification of the agreement | Section 24.1 of FA; Section 8.6 of DA | No modifications generally, but Manual subject to change. The Franchise Agreement may be modified by a writing signed by both parties or, at our option, upon approval of 75% of our franchisees and licensees affected by the modification. Unless prohibited by law or waived by us, you must provide a general release of any and all claims against us if you request and we consent to modify any provisions of the Franchise Agreement after it has been signed. |
| 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). |
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 provides details on renewal, termination, transfer, and dispute resolution within the Franchise Agreement and related agreements. The initial franchise term is 7 years, as stated in Section 18.1 of the Franchise Agreement. Fat Shack franchisees have the option to renew for up to three additional 5-year terms, as detailed in Section 18.3. To renew, a franchisee must provide written notice at least 180 days before the expiration of the current term, sign the then-current form of the Franchise Agreement, which may have materially different terms, sign a Successor Franchise Rider, be in compliance with the Franchise Agreement, pay a fee, and renovate if required.
The Franchise Agreement outlines conditions for termination by both the franchisee and Fat Shack. A franchisee can terminate with written notice if Fat Shack breaches the agreement and fails to cure the breach within 60 days after notification. Fat Shack can only terminate the agreement if the franchisee commits certain listed violations.
Regarding transfer, the Franchise Agreement specifies conditions for Fat Shack's approval, including full compliance, transferee qualification, payment of all dues, submission of all reports, no breaches during a specified period, the transferee signing the current franchise agreement, no competitive business involvement, lease transfer, subordination of amounts due, completion of training, and payment of transfer and on-site assistance fees. Fat Shack also retains the right of first refusal to acquire the franchisee's business for a 30-day period and an option to purchase the business at fair market value, less goodwill associated with Fat Shack's marks. In the event of death or disability, the franchise must be assigned to an approved buyer within 120 days, and a General Manager must always be present at the Fat Shack Restaurant. Dispute resolution is addressed through arbitration or litigation in Denver, Colorado, and Colorado law generally applies, subject to applicable state laws.