What must a Fat Shack franchisee meet in terms of sales to maintain their franchise agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| Column 1 | Column 2 | Column 3 | Column 4 |
|---|---|---|---|
| Type of Fee | Amount | Due Date | Remarks |
| Royalty1 | 6% of your Gross Sales2 | Payable weekly on Tuesday of each week based on the prior week's Gross Sales | The Royalty is for the ongoing grant of the rights to use the Marks and Licensed Methods, and on-going support. We will debit your bank account for the Royalty.3 You must meet minimum Sales Quota. See Item 12. |
| Marketing and Promotion Fee1 | None, but we reserve the right to charge up to 1½% of your Gross Sales2 | Payable with the Royalty Fee | We may collect a Marketing and Promotion Fee starting upon 30 days' notice to you. Once commenced, we will debit your bank account for amounts due.3 We may reallocate all or a portion of this fee to a Regional Advertising Program if one is established in your region. You must meet minimum Sales Quota. See Item 12. |
| Initial Training Program Expenses4,5 | Costs associated with attending our initial training program | As incurred | Payable to third party suppliers. |
| On-site Opening Assistance Fee1 | $195 per day for each day the on-site opening assistance is provided | As incurred | Only payable if our representatives must travel more than 100 miles and incur room and board expenses in providing this assistance. |
Source: Item 6 — Other Fees (FDD pages 15–18)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees must meet a minimum Sales Quota to maintain their franchise agreement. This requirement is tied to both the Royalty fee, which is 6% of Gross Sales, and the Marketing and Promotion Fee, which could be up to 1½% of Gross Sales. The Royalty fee is payable weekly on Tuesday, based on the prior week's Gross Sales, and will be debited from the franchisee's bank account. The Marketing and Promotion Fee, if implemented, is payable with the Royalty Fee and will also be debited from the franchisee's bank account. Item 12 of the FDD provides further details on the minimum Sales Quota.
Gross Sales are defined as sales of any kind for all services or products purchased from or through your FAT SHACK Restaurant, including sales made for cash or upon credit, or partly for cash and partly for credit, regardless of collection of charges for which credit is given, regardless of whether sales are conducted in compliance with or in violation of the terms of the Franchise Agreement, and regardless of whether sales occur at the site of your FAT SHACK Restaurant or off-site, but excluding discounts, sales taxes, or other similar taxes and credits. Gross Sales includes delivery fees and revenue from the redemption of FAT SHACK gift certificates, customer loyalty cards, gift cards and other prepaid cards. Gross Sales also includes the fair market value of any services or products you receive in barter or exchange for your products and services.
For a prospective Fat Shack franchisee, understanding and meeting the minimum Sales Quota is crucial for maintaining the franchise agreement. Failing to meet the quota could lead to penalties or termination of the agreement. Additionally, the definition of Gross Sales is broad, encompassing various forms of transactions, which franchisees must accurately track and report to ensure compliance and avoid understatement, which could lead to audits and additional costs. Franchisees should pay close attention to Item 12 in the FDD to fully understand the specific requirements and potential consequences related to the Sales Quota.