What are Fat Shack franchisees required to do to protect FSI from third-party claims?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to indemnify, defend and hold harmless FSI, its subsidiaries and affiliates, and their respective shareholders, directors, members, managers, officers, managers, members, employees, agents, successors and assigns (the "Indemnified Parties") against, and to reimburse them for all claims, obligations and damages described in this Section 20.3, any and all third party obligations described in Section 20.2, any amounts that FSI spends curing any default of Franchisee under this Agreement or any third party agreement if FSI, in its sole discretion, elects to cure such default, and any and all claims and liabilities directly or indirectly arising out of the operation of the FAT SHACK Restaurant, the use of the Marks and Licensed Methods in any manner, or the violation of any laws including labor and employment laws in the FAT SHACK Restaurant, unless (and then only to the extent) caused by the Indemnified Party's negligence. This indemnity includes any claims arising from the acts or omissions of Franchisee's Authorized Representatives. For purposes of this indemnification, "claims" shall mean and include all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties, including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses. Each Indemnified Party shall have the right to defend any such claim against it at Franchisee's expense and agree to settlements or any other actions. This indemnity shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees must indemnify, defend, and hold harmless FSI (Fat Shack International), its subsidiaries, affiliates, and their respective shareholders, directors, members, managers, officers, employees, agents, successors, and assigns (the "Indemnified Parties") against claims, obligations, and damages. This includes third-party obligations, amounts FSI spends curing any franchisee default, and claims and liabilities arising from the Fat Shack restaurant's operation, use of marks and licensed methods, or violation of laws, unless caused by the Indemnified Party's negligence. This extends to claims arising from the acts or omissions of the franchisee's Authorized Representatives.
The definition of "claims" includes all obligations, actual and consequential damages, and costs reasonably incurred in defending against any claim, including reasonable accountants', attorneys', and expert witness fees, investigation costs, court costs, litigation expenses, and travel and living expenses. Each Indemnified Party has the right to defend any claim at the franchisee's expense and agree to settlements or other actions. This indemnification remains in effect even after the agreement expires or terminates.
In simpler terms, as a Fat Shack franchisee, you are responsible for covering any legal or financial claims made against Fat Shack due to your restaurant's operations, unless those claims are a direct result of Fat Shack's own negligence. This could include anything from a customer injury to a lawsuit related to employment practices. The franchisee is responsible for all associated costs, including legal fees, and Fat Shack has the right to control the defense of any such claims. This is a significant responsibility that franchisees should carefully consider, as it could potentially involve substantial expenses.