factual

Does a Fat Shack franchisee need to sign a Subsequent Franchise Agreement related to the Fat Shack Restaurant for a particular location?

Fat_Shack Franchise · 2025 FDD

Answer from 2025 FDD Document

further provided in Article 4 below.

  • 3.3. Franchisee shall not, without the prior written approval of FSI and without signing a Subsequent Franchise Agreement related to the FAT SHACK Restaurant for a particular location, enter into any contract for the purchase or lease of any premises for use as a FAT SHACK Restaurant. FSI will assist Franchisee in the selection and approval of locations for its FAT SHACK Restaurants in accordance with the terms and conditions of the applicable Subsequent Franchise Agreement. Franchisee acknowledges that FSI has no obligation to select or acquire a location on behalf of Franchisee.
  • 3.4. Each Subsequent Franchise Agreement to be executed by Franchisee for each FAT SHACK Restaurant to be developed hereunder shall be in the form of Franchise Agreement then generally being offered to franchisees by FSI, which may contain terms subsequently different then the terms of the Initial Franchise Agreement. Notwithstanding the foregoing, FSI agrees that it will not charge an Initial Franchise Fee to Franchisee which is greater than the amounts set forth in Section 2.1. above. Franchisee acknowledges that FSI has the right, however, to charge then current published rates for the required products, royalty percentages, advertising contributions and other fees, products and services offered to Franchisee.
  • 3.5. Franchisee acknowledges that FSI shall have the right, in FSI's sole discretion, to waive the initial training program, which is the same as or similar to the training provided under Section 7.1 of the Initial Franchise Agreement, for the second and each subsequent FAT SHACK Restaurant developed under the terms of this Development Agreement. Franchisee may request assistance from FSI in addition to the assistance provided to Franchisee as described in the Initial Franchise Agreement, in connection with site selection, site feasibility studies, lease negotiations and other issues related to development of its Protected Area. If FSI agrees to provide such assistance, in FSI's sole discretion, FSI reserves the right to charge Franchisee for all travel, lodging, living expenses, telephone charges and other identifiable expenses incurred in connection with such assistance, plus a fee based on hourly time spent by any of FSI's employees in connection with such assistance, which fee will be charged in accordance with the then current daily or hourly rates being charged by FSI for assistance.

4. TERM AND TERMINATION

  • 4.1. Unless sooner terminated in accordance with this Article 4, this Development Agreement shall commence as of the date of execution hereof and shall end on the earlier of (1) the date the last Subsequent Franchise Agreement is executed to open the maximum number of FAT SHACK Restaurants set forth in the Addendum, or (2) the date of the deadline set forth in the Development Schedule for Franchisee to execute the Franchise Agreement for the last of its FAT SHACK Restaurants to be developed under this Development Agreement. After expiration of the term, or earlier termination of this Development Agreement as provided below, FSI shall have the right to establish, or license any other party to establish FAT SHACK Restaurants anywhere within the Protected Area.
  • 4.2.

Source: Item 23 — Receipts (FDD pages 53–223)

What This Means (2025 FDD)

According to the 2025 Fat Shack Franchise Disclosure Document, a franchisee must sign a Subsequent Franchise Agreement for each Fat Shack Restaurant location they develop. Specifically, the franchisee cannot enter into any contract to purchase or lease premises for a Fat Shack Restaurant without prior written approval from FSI and without signing a Subsequent Franchise Agreement related to that particular location.

The FDD states that each Subsequent Franchise Agreement will be in the form of the Franchise Agreement then generally offered to franchisees by FSI, which may contain terms different from the Initial Franchise Agreement. However, Fat Shack agrees not to charge an Initial Franchise Fee greater than the amount set forth in Section 2.1. The franchisee acknowledges that Fat Shack has the right to charge then-current published rates for required products, royalty percentages, advertising contributions, and other fees, products, and services.

Furthermore, the franchisee must provide written notice to Fat Shack of their intention to develop a restaurant at least 90 days before the deadline for executing each Subsequent Franchise Agreement. The Subsequent Franchise Agreement for the second and each subsequent Fat Shack Restaurant will be executed within 10 days after Fat Shack's approval of the particular restaurant location. Failure to execute any Subsequent Franchise Agreement or default in any term of any Subsequent Franchise Agreement may be deemed a default under the Development Agreement, potentially leading to termination of the Development Agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.