What insurance coverage is required for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
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- p. Franchisee shall procure, maintain and provide evidence of insurance for the FAT SHACK Restaurant and its operations, of the types, in the amounts, and with such terms and conditions as FSI may from time to time prescribe, in the Operations Manual or otherwise. All of the required policies of insurance shall show FSI as an additional insured and shall provide for 30-day advance written notice to FSI of cancellation or modification.
- q. Franchisee will provide proof of insurance to FSI prior to commencement of operations at its FAT SHACK Restaurant and proof of workers compensation insurance prior to sending any employee to the training program described in Article 7. This proof will show that the insurer has
been authorized to inform FSI in the event any policies lapse or are cancelled. FSI has the right to change the types and minimum amount of insurance Franchisee is required to maintain by giving Franchisee prior notice. Noncompliance with the insurance provisions set forth herein shall be deemed a material breach of this Agreement; in the event of any lapse in insurance coverage, in addition to all other remedies, FSI shall have the right to demand that Franchisee cease operations of the FAT SHACK Restaurant until coverage is reinstated or, alternatively, pay any delinquencies in premium payments and charge the same to Franchisee.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees must procure and maintain insurance for their Fat Shack restaurant and its operations. The specific types and amounts of insurance, along with the terms and conditions, are determined by Fat Shack Inc. (FSI) and can be prescribed in the Operations Manual or otherwise communicated to the franchisee.
All required insurance policies must list FSI as an additional insured and provide FSI with a 30-day advance written notice of any cancellation or modification of the policy. Franchisees must provide proof of insurance to FSI before commencing operations at their Fat Shack restaurant. They must also provide proof of workers' compensation insurance before sending any employee to the training program. This proof must show that the insurer is authorized to inform FSI if any policies lapse or are canceled.
FSI retains the right to modify the types and minimum amounts of insurance required, provided they give the franchisee prior notice. Failure to comply with these insurance requirements constitutes a material breach of the Franchise Agreement. If a franchisee's insurance coverage lapses, FSI has the right to demand that the franchisee cease operations until the coverage is reinstated. Alternatively, FSI can pay any overdue premium payments and charge the franchisee for those payments.
Prospective franchisees should carefully review the Operations Manual and any other communications from FSI to understand the specific insurance requirements. It is crucial to maintain continuous and adequate insurance coverage to avoid potential operational disruptions and breaches of the franchise agreement.