What happens if a Fat Shack franchisee fails to have sufficient funds for an ACH Payment?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
.
- c. In the event that Franchisee fails to have sufficient funds in its account or otherwise fails to pay any Royalties, Marketing and Promotion Fees, Noncompliance Service Charges, or other amounts due under this Agreement as of the Due Date, Franchisee shall owe, in addition to such Royalties, an insufficient funds fee of $50.00 for each violation. If any amounts are not paid within five days after it is due, Franchisee shall also owe a late fee of $50.00 for each failure to pay on time, as well as interest equivalent to 1½ percent per month of any late Royalty, Marketing and Promotion Fee, Noncompliance Service Charge, or other payment; provided, however, in no event shall Franchisee be required to pay interest at a rate greater than the maximum interest rate permitted by applicable law. This same interest rate shall apply as the post-judgment interest rate, regardless of the applicable statutory rate, in the event of any legal actions related to this Agreement.
5.5. Application of Payments
Notwithstanding any designation Franchisee might make, FSI has the discretion to apply any payments made by Franchisee to any of Franchisee's past due indebtedness to FSI. Franchisee acknowledges that FSI has the right to set-off any amounts Franchisee may owe to FSI against any amounts FSI might owe to Fran
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, if a franchisee fails to have sufficient funds in their account or otherwise fails to pay any Royalties, Marketing and Promotion Fees, Noncompliance Service Charges, or other amounts due by the due date, they will owe an insufficient funds fee of $50.00 for each violation. This is in addition to the original royalties or fees owed.
Furthermore, if any amounts remain unpaid five days after the due date, the franchisee will also owe a late fee of $50.00 for each failure to pay on time. Additionally, interest will accrue at a rate of 1½ percent per month on any late Royalty, Marketing and Promotion Fee, Noncompliance Service Charge, or other payment. However, the interest rate will not exceed the maximum interest rate permitted by applicable law.
Fat Shack retains the discretion to apply any payments made by the franchisee to any of the franchisee's past due indebtedness to Fat Shack, regardless of any designation the franchisee might make. Fat Shack also has the right to set-off any amounts the franchisee may owe to Fat Shack against any amounts Fat Shack might owe to the franchisee. These stipulations highlight the importance of maintaining sufficient funds and adhering to payment schedules to avoid additional fees and potential legal actions.