factual

What is being guaranteed by the undersigned to Fat Shack Inc. regarding the franchisee's obligations?

Fat_Shack Franchise · 2025 FDD

Answer from 2025 FDD Document

EXHIBIT V TO FRANCHISE AGREEMENT

GUARANTY AND ASSUMPTION OF FRANCHISEE'S OBLIGATIONS

  • A. In consideration of, and as an inducement to, the execution of the above Franchise Agreement ("Franchise Agreement") by FAT SHACK INC. ("FSI"), each of the undersigned hereby personally and unconditionally:
    1. Guarantees to FSI and its successors and assigns, for the term of the Franchise Agreement, including renewals thereof, that franchisee named on the signature page ("Franchisee") shall punctually pay and perform each and every undertaking, agreement and covenant set forth in the Franchise Agreement; and
    1. Agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Franchise Agreement, including but not limited to, the terms of the articles and sections pertaining to non-competition during and after the term, confidentiality and the Marks and copyrighted works of FSI.
  • B. Each of the undersigned waives the following:
      1. Acceptance and notice of acceptance by FSI of the foregoing undertaking;
    1. Notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed;
    1. Protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed;
    1. Any right he or she may have to require that any action be brought against Franchisee or any other person as a condition of liability; and
    1. Notice of any amendment, modification, deletion or addition of any term or condition of or to any of the obligations hereby guaranteed.
      1. Notice of any termination as to future liability of any other guarantor.
    1. Any and all other notices and legal or equitable defenses to which he or she may be entitled.
  • C. Each of the undersigned consents and agrees that:
      1. His or her direct and immediate liability under this guaranty will be joint and several;
    1. He or she will render any payment or performance required under the Franchise Agreement upon demand if Franchisee fails or refuses punctually to do so;
    1. His or her liability hereunder will not be contingent or conditioned upon pursuit by FSI of any remedies against Franchisee or any other person; and

Source: Item 23 — Receipts (FDD pages 53–223)

What This Means (2025 FDD)

According to Fat Shack's 2025 Franchise Disclosure Document, Exhibit V to the Franchise Agreement outlines the Guaranty and Assumption of Franchisee's Obligations. The undersigned, in consideration of Fat Shack Inc. executing the Franchise Agreement, personally and unconditionally guarantees that the franchisee will punctually pay and perform every undertaking, agreement, and covenant detailed in the Franchise Agreement for its entire term, including renewals. This guarantee extends to being personally bound by and liable for any breach of any provision within the Franchise Agreement. This includes, but is not limited to, terms related to non-competition during and after the franchise term, confidentiality, and the use of Fat Shack's trademarks and copyrighted materials.

This guarantee involves several waivers. The guarantor waives the right to acceptance and notice of acceptance by Fat Shack, notice of demand for payment of any debt, notice of default, and any right to require Fat Shack to first bring action against the franchisee or any other person before pursuing the guarantor. The guarantor also waives notice of any amendments or modifications to the obligations being guaranteed and any legal or equitable defenses they may be entitled to.

The guarantor consents and agrees that their liability is direct, immediate, joint, and several. They commit to rendering any payment or performance required under the Franchise Agreement upon demand if the franchisee fails to do so. The guarantor's liability is not contingent upon Fat Shack pursuing remedies against the franchisee or any other person. Furthermore, their liability will not be affected by any amendment, assignment, or modification of the Franchise Agreement or any extension of time granted.

For prospective Fat Shack franchisees, this means that if you are entering into the agreement as a business entity, certain individuals (shareholders, members, partners, officers, etc.) will be required to personally guarantee the franchise obligations. This is a common practice in franchising, especially when the franchisee is a business entity with limited assets. The personal guarantor is essentially vouching for the financial and operational viability of the franchise and providing Fat Shack with an additional layer of security.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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