Can a Fat Shack franchisee grant a subfranchise under the Development Agreement?

According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee is not permitted to subfranchise or license the rights granted to them under the Development Agreement. The Development Agreement grants the franchisee the right to develop and establish Fat Shack restaurants within a specific geographic area, but each restaurant must be established and operated under a separate Franchise Agreement directly with Fat Shack. The franchisee's rights are limited to developing and operating the restaurants themselves, and they cannot transfer these rights to another party through subfranchising.

This restriction means that a Fat Shack franchisee must personally oversee the development and operation of each of their franchised locations. They cannot delegate the responsibility of running a Fat Shack restaurant to a subfranchisee. This ensures that Fat Shack maintains control over the quality and consistency of its brand and operations.

This policy is fairly standard in the franchise industry, as franchisors typically want to maintain direct control over their brand and operational standards. Allowing subfranchising could dilute this control and lead to inconsistencies in the customer experience. While a Fat Shack franchisee can sell or transfer their franchise rights, this transfer is subject to Fat Shack's approval and right of first refusal, further ensuring that the brand's standards are upheld.