What must a Fat Shack franchisee execute to exercise successor franchise rights?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
18.4 below.
18.4. Prerequisites for Successor Franchise Rights
Franchisee shall only be entitled to exercise its successor franchise rights if Franchisee:
- a. At FSI's option, and at least 30 days prior to expiration of the term, executes the form of Franchise Agreement then in use by FSI, which may have terms substantially different than those set forth in this Agreement, including terms changing the Royalty and other fee amounts, and changing the number of options remaining to be exercised;
- b. Is not in default or under notification of breach of this Agreement at the time it gives notice under Section 18.3, and has maintained compliance with all provisions of this Agreement during the current term, including the payment on a timely basis of all Royalty Fees and other payments due hereunder. "Compliance" means, at a minimum, that Franchisee has not received any written notification from FSI of breach hereunder more than three times during the term hereof:
- c. Agrees to upgrade and remodel the FAT SHACK Restaurant at Franchisee's sole expense (the necessity of which shall be at FSI's option) to conform with the then-current Operations Manual requirements;
- d. Executes a successor franchise rider in the form then in use by FSI which (unless prohibited by law) includes a general release of any and all claims against FSI, its affiliates and their respective officers, directors, employees and agents;
- e. Pays a successor franchise fee ("Successor Franchise Fee") in the amount of $6,000.00 upon each exercise of the successor franchise rights and any other fees set forth in the successor franchise rider to cover FSI's expenses related to reviewing Franchisee's operations and approving the option. The Successor Franchise Fee will be due and payable upon execution of FSI's then current Franchise Agreement and will be nonrefundable under all circumstances once paid. The Successor Franchise Fee is paid in lieu of an additional initial franchise fee; and
- f. Successfully completes, or has its General Manager successfully complete, as applicable, a refresher operations training program provided by FSI or a third party authorized by FSI, unless waived by FSI. Franchisee will be responsible for all travel and living expenses associated with attendance at the refresher operations
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 execute several documents and fulfill specific requirements to exercise their successor franchise rights. At Fat Shack's option, the franchisee must execute the then-current form of Franchise Agreement, which may have substantially different terms than the original agreement, including changes to royalty and other fee amounts, and the number of options remaining. Additionally, the franchisee must execute a successor franchise rider in the form then in use by Fat Shack, which includes a general release of any and all claims against Fat Shack, its affiliates, and their respective officers, directors, employees, and agents.
To be eligible for successor franchise rights, the Fat Shack franchisee must not be in default or under notification of breach of the agreement at the time of giving notice and must have maintained compliance with all provisions of the agreement during the current term, including timely payment of all Royalty Fees and other payments. Compliance means the franchisee has not received more than three written notifications of breach from Fat Shack during the term. The franchisee must also agree to upgrade and remodel the Fat Shack Restaurant at their sole expense, if required by Fat Shack, to conform with the then-current Operations Manual requirements.
Furthermore, the Fat Shack franchisee must pay a successor franchise fee of $6,000 upon each exercise of the successor franchise rights, along with any other fees set forth in the successor franchise rider to cover Fat Shack's expenses related to reviewing the franchisee's operations and approving the option. This fee is due upon execution of Fat Shack's then-current Franchise Agreement and is nonrefundable. Lastly, the franchisee or their General Manager must successfully complete a refresher operations training program provided by Fat Shack or an authorized third party, unless waived by Fat Shack. The franchisee is responsible for all travel and living expenses associated with attending the refresher operations training program.