If a Fat Shack franchisee offers alcohol, what specific laws must they comply with?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee will conduct itself and operate its FAT SHACK Restaurant in compliance with all applicable laws, regulations and other ordinances and in such a manner so as to promote a good public image in the business community, including, if Franchisee offers alcohol beverages at its FAT SHACK Restaurant, all applicable liquor licensing laws, regulations and ordinances and dram shop laws. In connection therewith, Franchisee will be solely and fully responsible for obtaining any and all licenses to operate the FAT SHACK Restaurant. Franchisee shall keep copies of all health department, fire department, building department and other similar reports of inspections by governmental authorities on file and available for inspection by FSI. Franchisee shall immediately forward to FSI any such reports or inspections in which Franchisee has been found not in compliance with the underlying regulation. Franchisee shall also promptly notify FSI in writing of any notices of default or non-compliance under its lease or any other third-party contracts related to the operation of the FAT SHACK Restaurant, by sending copies of all such notices to FSI. FSI has no obligation to advise Franchisee of any legislative or other legal developments that may affect its FAT SHACK Restaurant. Franchisee is solely responsible for inquiring about and becoming familiar with all applicable laws, ordinances, and regulations, and determining those actions required for compliance. Any information FSI provides to Franchisee regarding applicable laws, ordinances, or regulations does not relieve Franchisee of its responsibility to consult with its own legal advisor and otherwise take appropriate action to inquire about and comply with applicable laws, ordinances, and regulations.
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 chooses to offer alcoholic beverages at their Fat Shack restaurant, they must comply with all applicable liquor licensing laws, regulations, ordinances, and dram shop laws. The franchisee is solely responsible for obtaining all necessary licenses to operate the restaurant, implying that Fat Shack will not assist in this process.
This requirement places a significant responsibility on the franchisee to understand and adhere to local and state alcohol regulations, which can vary widely. Failure to comply with these laws can result in fines, suspension or revocation of licenses, and potential legal liabilities under dram shop laws, which hold establishments liable for damages caused by intoxicated patrons they served.
Fat Shack emphasizes that it is not obligated to advise the franchisee on any legislative or legal developments affecting their restaurant. The franchisee bears the responsibility of staying informed about all applicable laws and regulations and consulting with their own legal advisor to ensure compliance. This underscores the importance of due diligence and ongoing legal consultation for franchisees who plan to serve alcohol.
This approach is fairly standard in the franchise industry, where franchisees are generally responsible for complying with local laws and regulations. However, the specific mention of liquor licensing and dram shop laws highlights the increased legal and financial risks associated with serving alcohol, making it crucial for prospective Fat Shack franchisees to carefully consider these factors before deciding to offer alcoholic beverages.