What happens if there is a default by either party in the Fat Shack Development Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event of any default on the part of either party to this Development Agreement, in addition to all other remedies, the party in default will pay the aggrieved party all amounts due and all damages, costs and expenses, including reasonable attorneys' fees, incurred by the aggrieved party in any legal action, arbitration or other proceeding as a result of such default, plus interest at the highest rate allowable by law, accruing from the date of such default.
This same interest rate shall apply as the postjudgment interest rate, regardless of the applicable statutory rate, in the event of any legal actions related to this Development Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, if either party defaults on the Development Agreement, the defaulting party must pay the aggrieved party all amounts due, damages, costs, and expenses, including reasonable attorneys' fees. This also includes interest at the highest rate allowable by law, accruing from the date of the default. This interest rate applies as the post-judgment interest rate in any legal actions related to the Development Agreement, regardless of the applicable statutory rate.
Additionally, Fat Shack can terminate the Development Agreement if the franchisee defaults on any term or condition, including failing to execute required Franchise Agreements or maintain the number of Fat Shack Restaurants required by the Development Schedule. Fat Shack must provide 30 days written notice to the franchisee to cure the default. A default under any Franchise Agreements executed in furtherance of the Development Agreement, or any other agreement between Fat Shack and the franchisee, can also lead to termination if not cured within the specified time periods in those agreements.
However, if the Development Agreement is terminated solely because the franchisee fails to meet the Development Schedule, this will not be considered a default or result in the termination of any existing Franchise Agreements. In such cases, the existing Franchise Agreements will remain in effect, overriding any conflicting statements in those agreements. If the Development Agreement is terminated due to any other default, Fat Shack has the option to terminate all Franchise Agreements executed in furtherance of the Development Agreement and all other agreements between Fat Shack and the franchisee.
In the event of termination or expiration of the Development Agreement for any reason, the franchisee is not entitled to any refund of fees paid. The franchisee remains subject to nondisclosure and non-compete provisions, as well as the terms of any franchise agreements that have not been terminated or expired. Fat Shack's rights and remedies are not exclusive and are in addition to any other rights or remedies provided by law or equity.