What does the Guaranty and Assumption of Franchisee's Obligations guarantee regarding the Fat Shack franchisee's obligations?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, partnership, limited liability company or other business entity, the following additional conditions must be met, along with any other conditions as may be established by FSI for entity franchisees:
- a. Contemporaneously with the business entity acquiring the franchise rights, thereafter upon the issuance or transfer of any ownership interests in the business entity or the appointment or election of any person as director, officer, member or manager of the business entity, and at any other time requested by FSI, the shareholders, members, partners, other owners, directors, officers, managers (as applicable), and any other individuals as designated by FSI will execute the Guaranty and Assumption of Franchisee's Obligations attached hereto as Exhibit V and incorporated herein by reference, personally guaranteeing full payment and performance of Franchisee's obligations to FSI and individually undertaking to be bound, jointly and severally, by all the terms of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, the Guaranty and Assumption of Franchisee's Obligations ensures that if the franchisee is a business entity, such as a corporation or LLC, certain individuals associated with the franchisee (shareholders, members, partners, directors, officers, managers, and potentially others designated by Fat Shack) must personally guarantee the franchisee's obligations to Fat Shack. This guaranty is attached as Exhibit V to the Franchise Agreement.
The individuals signing the guaranty agree to ensure the franchisee punctually pays and performs all undertakings, agreements, and covenants outlined in the Franchise Agreement. They also agree to be personally bound by and liable for any breaches of the Franchise Agreement, including terms related to non-competition, confidentiality, and the use of Fat Shack's trademarks and copyrighted materials. This personal guarantee remains in effect for the entire term of the Franchise Agreement, including any renewals.
These individuals waive certain rights, including the right to receive notice of acceptance of the guaranty, demands for payment, or notice of default. They also waive the right to require Fat Shack to first pursue action against the franchisee before seeking recourse from the guarantors. The liability under the guaranty is joint and several, meaning each guarantor is individually and collectively responsible for the franchisee's obligations. This arrangement is designed to provide Fat Shack with added security that the franchisee will meet all of its obligations under the Franchise Agreement.