What interest rate applies to amounts due after a default 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 the 2025 Fat Shack 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 attorney's fees. This also includes interest at the highest rate allowable by law, accruing from the date of the default.
This interest rate also applies as the post-judgment interest rate, regardless of the applicable statutory rate, in the event of any legal actions related to the Development Agreement. This means that the interest rate applied both before and after a judgment will be the highest rate legally permitted, providing a strong incentive for the defaulting party to resolve the issue promptly.
For a prospective Fat Shack franchisee, this clause highlights the importance of adhering to the terms of the Development Agreement. Failure to do so could result in significant financial penalties, including not only the original amounts owed but also potentially high interest charges and legal fees. Franchisees should be aware of their obligations and take steps to avoid default to mitigate these risks.