What is the insufficient funds fee charged to a Fat Shack franchisee for each violation?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
rvice Charge
In the event that Franchisee fails to comply with any obligation set forth in this Agreement or any mandatory standard or specification in the Operations Manual or otherwise established by FSI, FSI shall have the right upon written notice to Franchisee to impose a noncompliance service charge ("Noncompliance Service Charge"). The Noncompliance Service Charge may, at FSI's option, immediately be charged by FSI to Franchisee via electronic funds transfer pursuant to Section 12.4 or invoiced to Franchisee for payment within 10 days. If FSI is providing its first written notice to Franchisee of a failure to comply, then no Noncompliance Service Charge shall be imposed, but for the second notice the Noncompliance Service Charge shall be up to $150.00 for each event of noncompliance by Franchisee, for the third notice the Noncompliance Service Charge shall be up to $500.00 for each event of noncompliance by Franchisee, and for the fourth and each subsequent notice the Noncompliance Service Charge shall be up to $1,000.00 for each event of noncompliance by Franchisee, with the exact amount imposed determined by FSI at its discretion. The Noncompliance Service Charge is intended to compensate FSI for the administrative costs that it incurs in monitoring, notifying, and following up with Franchisee in the event of noncompliance. The imposition of the Noncompliance Service Charge is in addition to any other rights or remedies that FSI may have in the event of noncompliance by Franchisee including, without limitation, any right to declare a default or terminate this Agreement as described i
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
Based on the 2025 Fat Shack Franchise Disclosure Document, the document does not specify a particular fee for insufficient funds. However, it does outline a "Noncompliance Service Charge" that could be relevant if a franchisee's failure to have sufficient funds constitutes noncompliance with the franchise agreement.
The Noncompliance Service Charge is levied if a Fat Shack franchisee fails to meet any obligation outlined in the agreement or mandatory standards in the Operations Manual. The charge is imposed after written notice. The first notice does not incur a charge, the second notice can be up to $150.00, the third notice can be up to $500.00, and the fourth and subsequent notices can be up to $1,000.00 for each instance of noncompliance. The exact amount is determined by Fat Shack at its discretion.
It's important to note that these charges are intended to cover Fat Shack's administrative costs related to monitoring and addressing noncompliance. The Noncompliance Service Charge is in addition to any other legal remedies Fat Shack may pursue for franchisee noncompliance, including declaring a default or terminating the agreement. A prospective franchisee should clarify with Fat Shack corporate whether an insufficient funds violation would trigger the Noncompliance Service Charge or another fee.