Can Fat Shack freely transfer the Franchise Agreement to another party?
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:
- a. All amounts due and owing pursuant to this Agreement or otherwise by Franchisee to FSI, its affiliates or to third parties whose debts or obligations FSI has guaranteed on behalf of Franchisee, if any, are paid in full;
- b. Franchisee has submitted all required reports and statements;
- c. Franchisee has not violated any provision of this Agreement, the FAT SHACK Restaurant's lease, or any other agreement with FSI during the 60-day period before Franchisee requested FSI's consent to the transfer or during the period between Franchisee's request and the effective date of the transfer:
- d. The proposed transferee agrees to operate the FAT SHACK Restaurant as a FAT SHACK Restaurant, signs the then-current form of franchise agreement, the provisions of which may differ materially from any and all of those contained in this Agreement, and satisfactorily completes the initial training program;
- e. Franchisee provides written notice to FSI at least 30 days prior to the proposed effective date of the transfer, and includes information reasonably detailed to enable FSI to evaluate the
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, a franchisee cannot freely transfer their Franchise Agreement. The FDD outlines several pre-conditions and requirements that must be met before Fat Shack will approve a transfer.
Specifically, a transfer cannot occur until the Fat Shack restaurant has opened for business, and the franchisee must be in full compliance with the Franchise Agreement. The proposed transferee must also meet Fat Shack's standards for franchisees. Before the transfer can be finalized, all outstanding amounts owed to Fat Shack and its affiliates must be paid, and all required reports and statements must be submitted. The franchisee must not have violated any agreements with Fat Shack within 60 days before requesting the transfer.
The proposed transferee must agree to operate the Fat Shack restaurant as a Fat Shack, sign the current franchise agreement (which may differ from the original), and complete the initial training program. The franchisee must also provide written notice to Fat Shack at least 30 days before the proposed transfer date, including detailed information about the transfer terms and a written offer from the proposed transferee. Additionally, in the event of a transfer, the franchisee and/or the proposed transferee must pay Fat Shack the standard transfer fee, plus $5,000 for every undeveloped franchise right for which no Subsequent Franchise Agreement has been executed.
These conditions ensure that Fat Shack maintains control over who operates its franchises and that any new franchisee meets its standards and obligations. Prospective franchisees should carefully consider these requirements and the associated costs before deciding to purchase a Fat Shack franchise, as transferring the franchise may not be a straightforward process.