What is the Fat Shack franchisee's obligation if they change their bank account?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee revokes or cancels the Authorization Agreement executed by Franchisee and provided to FSI pursuant to Section 5.4, or takes other steps to prevent FSI from obtaining payment of any amounts due under this Agreement, or otherwise, by electronic funds transfer of funds from Franchisee's bank account to FSI's bank account, and fails to provide a valid replacement Authorization Agreement within five days after receiving notice of such matter.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, if a franchisee revokes or cancels the Authorization Agreement that allows Fat Shack to electronically transfer funds from the franchisee's bank account, or takes steps to prevent these transfers, they must provide Fat Shack with a valid replacement Authorization Agreement within five days of receiving notice. This agreement is initially executed per Section 5.4 of the franchise agreement.
This requirement ensures that Fat Shack can continue to collect fees and other amounts due from the franchisee without interruption. The franchisee's failure to provide a replacement authorization within the specified timeframe constitutes a breach of the franchise agreement.
This clause is significant because it allows Fat Shack to maintain consistent revenue streams and avoid delays in payments. For a prospective franchisee, it highlights the importance of maintaining a stable banking relationship and promptly addressing any issues that may arise with electronic fund transfers. Failure to comply can lead to further action from the franchisor as outlined in the franchise agreement.