For Fat Shack franchises, how long do the two appointed appraisers have to appoint the third appraiser?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Except in the case of the grant of successor franchise rights under Article 18, upon termination or expiration of this Agreement for any reason, FSI shall have the option to purchase the FAT SHACK Restaurant, or a portion of the assets of the FAT SHACK Restaurant, which may include, at FSI's option, all of Franchisee's interest, leasehold or otherwise, in and to the real estate upon which the FAT SHACK Restaurant is located, and all buildings and other improvements related thereto. The purchase price for the assets to be transferred will be the fair market value of the assets, excluding any good will associated with the Marks, as mutually determined by FSI and Franchisee, or if they are unable to mutually agree on the purchase price, by FSI and Franchisee each choosing one independent appraiser who, in turn, choose a third independent appraiser, with the third appraiser's determination being binding upon the parties. The purchase price for the assets will be adjusted by setting off any amount then owing by Franchisee to FSI, including any amounts paid by FSI to cure Franchisee's defaults with third parties such as landlords (the decision to pay such cure amounts to be in the sole and absolute discretion of FSI). FSI and Franchisee shall each pay the fees and expenses of their chosen appraisers and they shall evenly split the fees and expenses of the third appraiser. The following additional terms shall apply to FSI's exercise of this option:
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
The 2025 Fat Shack Franchise Disclosure Document outlines the process for determining the purchase price of a Fat Shack restaurant if the franchisor, FSI, chooses to purchase it upon termination or expiration of the franchise agreement. If Fat Shack and the franchisee cannot agree on a price, each party selects an independent appraiser. These two appraisers then choose a third independent appraiser, whose determination is binding.
The FDD does not specify a timeframe within which the two initial appraisers must select the third appraiser. This lack of a defined timeframe could potentially lead to delays in finalizing the purchase price and completing the transfer of the Fat Shack restaurant.
A prospective Fat Shack franchisee should ask the franchisor for clarification on the expected timeframe for the appraisers to appoint the third appraiser. Understanding this timeline is crucial for financial planning and ensuring a smooth transition should Fat Shack exercise its option to purchase the restaurant.