Is the guarantor of a Fat Shack Franchise Agreement bound by the indemnification provisions in the Franchise Agreement?
Fat_Shack Franchise · 2025 FDDAnswer 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:
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- 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
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- 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.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, the guarantor of a Fat Shack franchise agreement is bound by each and every provision in the Franchise Agreement.
Specifically, Exhibit V to the Franchise Agreement states that the guarantor agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Franchise Agreement. This includes, but is 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.
This means that if the Fat Shack franchisee fails to meet their obligations under the Franchise Agreement, the guarantor is equally responsible for those obligations. This includes any indemnification obligations, which typically require the franchisee to protect Fat Shack from losses or liabilities arising from the operation of the franchise.
A prospective Fat Shack franchisee should carefully consider the implications of the guaranty, as it puts the guarantor's personal assets at risk if the franchise does not perform as expected. It is advisable for the guarantor to seek legal counsel to fully understand the scope of their obligations.