Is a Fat Shack franchisee permitted to transfer their franchise before the restaurant has opened for business?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that there may be no transfers before the FAT SHACK Restaurant has opened for business. FSI will not approve a proposed transfer in any case where Franchisee (and its owners) is not in full compliance with this Agreement. The proposed transferee and its owners must be individuals of good moral character and otherwise meet FSI's then applicable standards for franchisees. In the event of a transfer, all of the following conditions must be met before or concurrently with the effective date of the transfer:
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee is not permitted to transfer their franchise before the Fat Shack restaurant has opened for business. The FDD states explicitly that Fat Shack will not approve any transfers before the restaurant is open. This restriction is in place to ensure that the initial franchisee is committed to establishing the business before transferring it to someone else.
This requirement has significant implications for prospective Fat Shack franchisees. It means that franchisees cannot enter into an agreement with the intention of quickly flipping the franchise for a profit before even opening the restaurant. They must first establish and operate the Fat Shack location. This protects Fat Shack's brand and ensures that new locations are properly set up and managed.
In addition to the restaurant being open, Fat Shack also requires that the franchisee is in full compliance with the franchise agreement. The potential transferee must also meet Fat Shack's standards for franchisees. These standards include being of good moral character. All outstanding payments and required reports must be submitted before the transfer can be approved. The transferee must also agree to operate the Fat Shack restaurant as a Fat Shack restaurant and sign the current franchise agreement, which may have different provisions from the original agreement.