What does the guarantor of a Fat Shack franchise waive regarding notice of demand for payment?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Each of the undersigned waives the following:
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- Acceptance and notice of acceptance by FSI of the foregoing undertaking;
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- Notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed;
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- Protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed;
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- 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
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- Notice of any amendment, modification, deletion or addition of any term or condition of or to any of the obligations hereby guaranteed.
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- Notice of any termination as to future liability of any other guarantor.
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- Any and all other notices and legal or equitable defenses to which he or she may be entitled.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack FDD, the guarantor of a franchisee's obligations waives the right to receive notice of demand for payment regarding any indebtedness or nonperformance of obligations guaranteed under the Franchise Agreement. This waiver is part of a broader agreement where the guarantor personally and unconditionally guarantees the franchisee's payments and performance. This guarantee extends for the term of the Franchise Agreement, including any renewals.
In practical terms, this means that Fat Shack can seek payment directly from the guarantor without first notifying them that the franchisee has failed to pay or perform their obligations. The guarantor is essentially giving up their right to be informed of any issues before being held liable. This places a significant responsibility on the guarantor, as they must be prepared to fulfill the franchisee's obligations immediately upon demand from Fat Shack.
This type of waiver is common in franchise agreements, as it provides the franchisor with an additional layer of security. By requiring a personal guarantee and a waiver of notification, Fat Shack aims to ensure that it can quickly and efficiently recover any outstanding debts or address any breaches of the Franchise Agreement. Prospective franchisees should carefully consider the implications of this requirement and ensure that any potential guarantors are fully aware of the obligations they are undertaking.
It is important for the guarantor to understand that their liability is joint and several, meaning Fat Shack can pursue the guarantor for the full amount owed, regardless of whether the franchisee has other assets or resources. The guarantor's obligations are not contingent upon Fat Shack first pursuing remedies against the franchisee. This underscores the importance of the guarantor having a thorough understanding of the franchisee's business and financial situation before agreeing to provide a guarantee.