Is a Fat Shack franchisee allowed to sign a lease that Fat Shack has not approved?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
You may not sign a lease that we have not approved.
Initial Starting Package
Before your FAT SHACK Restaurant opens for business, you must purchase an initial starting package of materials from us, including smallwares, kitchen signage, take-out menus, promotional items, stereo system receiver and interior décor. You will be required to pay us $9,500 for this initial starting package. We reserve the right to require that this package be purchased from our approved supplier rather than from us directly.
Source: Item 5 — Initial Fees (FDD pages 13–15)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee is explicitly prohibited from signing a lease that Fat Shack has not approved. Fat Shack must approve the location for the restaurant, and if the site is approved, they will review the lease or purchase agreement. This review is solely for Fat Shack's benefit to ensure the lease meets their minimum criteria and protects their interests. Fat Shack will review up to two leases or purchase agreements without charge. However, if they are required to review three or more, the franchisee must pay a Lease Review Fee of $750 plus out-of-pocket costs for reviewing and potentially negotiating the lease.
Even with the Lease Review Fee, Fat Shack emphasizes that their legal counsel or advisors are not representing the franchisee's interests. Fat Shack recommends that franchisees hire their own attorney or professional advisors to review the lease agreement, in addition to Fat Shack's review. The franchisee is responsible for the costs of their own advisors.
This requirement ensures that Fat Shack maintains control over the locations and lease terms of its franchises, which is a common practice in franchising. It helps protect the brand's image and operational standards. However, it also means that franchisees must factor in the time and potential costs associated with the lease review process, including the Lease Review Fee and the expense of hiring their own legal counsel.