What happens if a Fat Shack franchisee terminates the agreement without following the specified procedure for material breach?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
by Franchisee
Franchisee shall have the right to terminate this Agreement due to a material breach of this Agreement by FSI, provided Franchisee provides FSI with written notice of the breach within 60 days of
the breach and a reasonable opportunity to cure such breach, which shall in no event be less than 60 days. Notwithstanding the foregoing, if the breach is curable, but is of a nature which cannot be reasonably cured within such 60-day period and FSI has commenced and is continuing to make good faith efforts to cure the breach, FSI shall be given an additional reasonable period of time to cure the same, and this Agreement shall not terminate. Any termination by Franchisee other than in accordance with this section will be deemed a termination by Franchisee without cause and the Restaurant will be considered abandoned.
19.2.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee must follow a specific procedure if they wish to terminate the franchise agreement due to a material breach by Fat Shack. The franchisee must provide Fat Shack with written notice of the breach within 60 days of its occurrence and give Fat Shack a reasonable opportunity, no less than 60 days, to fix the issue. If the breach cannot reasonably be fixed within 60 days but Fat Shack is making good faith efforts to cure it, they are to be given additional time.
If a Fat Shack franchisee terminates the agreement without adhering to this procedure, the termination will be considered a termination by the franchisee without cause. In this case, the Fat Shack restaurant will be considered abandoned. This could have significant financial and legal ramifications for the franchisee, as they may be in breach of contract and subject to penalties.
It is important for prospective Fat Shack franchisees to understand the specific conditions and procedures for terminating the franchise agreement to avoid potential legal and financial repercussions. Franchisees should consult with an attorney to fully understand their rights and obligations under the agreement.