Does the Fat Shack franchisee have to comply with the terms of the Initial Franchise Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties acknowledge that concurrently herewith, they have executed a Franchise Agreement (the "Initial Franchise Agreement") governing the operation of Franchisee's first FAT SHACK Restaurant to be opened hereunder.
Franchisee agrees to comply with the terms and conditions of the Initial Franchise Agreement as a part of its obligations hereunder and acknowledges that failure to execute and comply with the Initial Franchise Agreement is a breach of this Development Agreement.
- 1.5.
Franchisee agrees that if Franchisee is an entity, all of the owners of Franchisee and any other individuals designated by FSI shall sign the Guaranty and Assumption of Franchisee's Obligations attached hereto as Exhibit B and incorporated herein by this reference.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee must comply with the terms and conditions of the Initial Franchise Agreement as part of their obligations under the Development Agreement. Failure to comply with the Initial Franchise Agreement constitutes a breach of the Development Agreement.
Furthermore, during the term of the Development Agreement, the franchisee, along with their officers, partners, directors, agents, or employees who have completed Fat Shack's training programs or accessed the Operations Manual, and beneficial owners with a 5% or greater interest in the franchisee, including their immediate families, are subject to the restrictive covenants outlined in the Initial Franchise Agreement and any related Nondisclosure and Noncompetition Agreements. These covenants are incorporated by reference into the Development Agreement.
Upon termination or expiration of the Development Agreement, these restrictive covenants continue to apply, based on the franchise agreement related to the last Fat Shack Restaurant operated by the franchisee and any associated Nondisclosure and Noncompetition Agreements. This ensures ongoing compliance with Fat Shack's standards and protection of its business interests even after the Development Agreement concludes.