Can a Fat Shack franchisee terminate the Development Agreement, and if so, what are the conditions?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
s anywhere within the Protected Area.
- 4.2. This Development Agreement may be terminated by Franchisee for any reason upon 60 days prior written notice to FSI, provided that Franchisee will not be entitled to a refund of any fees paid hereunder under any circumstances.
- 4.3. Franchisee shall be deemed in default and this Development Agreement may be terminated by FSI, at its option, in the following circumstances:
- (i) Franchisee defaults on any term or condition of this Development Agreement, including without limitation, the failure to execute the required Franchise Agreements or maintain the number of FAT SHACK Restaurants required by the Development Schedule, and fails to cure such default after 30 days written notice to Franchisee; or
- (ii) Franchisee is in default under any of the Franchise Agreements executed in furtherance of this Development Agreement or any other agreement between FSI or any of FSI's affiliates and Franchisee or any of Franchisee's affiliates and fails to cure such default within the time periods specified in such other agreements.
- 4.4. If this Development Agreement is terminated due solely to a failure by Franchisee to meet the Development Schedule, FSI and Franchisee agree that such termination shall not constitute a default or result in a termination of any Franchise Agreements executed between Franchisee and FSI in effect as of the date of termination of this Development Agreement. In that case, those Franchise Agreements shall continue in full force and effect notwithstanding the termination of this Development Agreement. FSI and Franchisee agree that any statements to the contrary in the Franchise Agreements executed by them, including any cross-default and cross-termination provisions, will be inapplicable in the situation of a termination of this Development Agreement based solely on Franchisee's failure to meet the Development Schedule. If this Development Agreement is terminated due to any other default under Section 4.3 above, all Franchise Agreements executed in furtherance of this Development Agreement and all other agreements between FSI and Franchisee or any of Franchisee's affiliates may, at FSI's sole option, be terminated.
- 4.5. In the event of termination or expiration of this Development Agreement for any reason, Franchisee shall not be entitled to any refund of any portion of the fees paid hereunder. Franchisee shall remain subject to the provisions of Article 6 of this Development Agreement regarding nondisclosure and covenants not to compete, in addition to the terms and conditions of any and all franchise agreements executed in furtherance of this Development Agreement which have not also been terminated or expired. No right or remedy herein conferred upon or reserved by FSI is exclusive of any other right or remedy provided or permitted by law or equity.
5. ASSIGNMENT
- 5.1. FSI may transfer or assign its rights under this Development Agreement at any time upon notice to Franchisee.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee can terminate the Development Agreement under specific conditions. The franchisee has the option to terminate the Development Agreement for any reason, provided they give Fat Shack 60 days prior written notice. However, the franchisee will not be entitled to a refund of any fees paid under any circumstances.
Conversely, Fat Shack can terminate the Development Agreement if the franchisee defaults on any term or condition, including failing to execute the required Franchise Agreements or maintain the number of Fat Shack Restaurants required by the Development Schedule. Fat Shack must provide a 30-day written notice for the franchisee to cure the default. Additionally, if the franchisee defaults under any Franchise Agreements or other agreements with Fat Shack or its affiliates and fails to cure the default within the specified time periods in those agreements, Fat Shack can terminate the Development Agreement.
If the Development Agreement is terminated solely because the franchisee failed to meet the Development Schedule, any existing Franchise Agreements remain in effect. However, if the termination is due to any other default, Fat Shack has the option to terminate all Franchise Agreements executed under the Development Agreement and any other agreements between Fat Shack and the franchisee. In the event of termination or expiration of the Development Agreement for any reason, the franchisee is not entitled to a refund of any fees paid and remains subject to non-disclosure and non-compete covenants.