Is a Fat Shack franchisee allowed to commence arbitration with a third party against FSI?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that its sole recourse for claims (whether in contract or in tort, in law or in equity, or granted by statute) arising between the parties shall be against FSI or its successors and assigns. Franchisee agrees that the shareholders, directors, members, managers, officers, employees, and agents of FSI and its affiliates (the "Nonparty Affiliates") shall not be personally liable nor named as a party in any action between FSI and Franchisee. To the maximum extent permitted by law, Franchisee waives any such claims against such Nonparty Affiliates.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
Based on the 2025 Fat Shack Franchise Disclosure Document, the franchisee's recourse for claims is solely against FSI, its successors, and assigns. The franchisee agrees that shareholders, directors, members, managers, officers, employees, and agents of FSI and its affiliates are not personally liable and cannot be named in any action between FSI and the franchisee. The franchisee waives any claims against these Nonparty Affiliates to the maximum extent permitted by law. This indicates that while franchisees can pursue claims against Fat Shack itself, they generally cannot directly target the company's affiliates or related individuals in legal proceedings.
This limitation of liability is a protective measure for Fat Shack, shielding its related parties from direct legal action initiated by franchisees. It directs any legal grievances solely towards the parent company, streamlining potential disputes and potentially reducing the scope of liability for individuals and affiliated entities.
However, the FDD excerpt does not explicitly address whether a Fat Shack franchisee can commence arbitration against FSI with a third party involved. It only specifies that the franchisee's recourse for claims is against FSI. Therefore, it remains unclear whether a franchisee is allowed to include a third party in an arbitration claim against FSI. A prospective franchisee should seek clarification from Fat Shack regarding the permissibility of involving third parties in arbitration claims against the company.