What law governs the Fat Shack agreement if FSI is not a party to any action?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
ompany is located.
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- Arbitration. Any and all controversies, disputes or claims between FSI, its subsidiaries and affiliated companies or their shareholders, members, managers, officers, directors, agents, employees and attorneys (in their representative capacity); Company, its shareholders, members, managers, officers,
directors, agents and employees; and/or Associate arising out of or related to this Agreement or the validity hereof shall be submitted for binding arbitration; except for actions for injunctive relief pursuant to Section 7, which actions FSI and/or Company at their option may bring either in a court of competent jurisdiction or in arbitration. If FSI is a party to any controversy, dispute or claim, such arbitration proceedings shall be conducted in Denver, Colorado, will be submitted to the Judicial Arbiter Group, will be heard by one arbitrator in accordance with the then current rules of the American Arbitration Association ("AAA") applicable to commercial arbitration, and the arbitrator shall be a resident of the State of Colorado knowledgeable of Colorado law and fluent in English. The arbitration proceeding and all other hearings shall be conducted in English only, although Associate shall have the right, at Associate's option and sole expense, to have a translator present at the proceeding or other hearings. If FSI is not a party to such controversy, dispute or claim, such arbitration proceedings shall be conducted within the area in which Company's FAT SHACK Restaurant is based and will be heard by one arbitrator in accordance with the then current commercial arbitration rules of any arbitration group mutually acceptable to Company and Associate, and if Company and Associate cannot agree on an arbitration group within 30 days after demand for arbitration, then the AAA shall conduct such arbitration in accordance with its then current commercial arbitration rules. All jurisdictional issues will be decided by the arbitrator.
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- Attorneys' Fees.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, the agreement is governed by specific laws depending on whether FSI (presumably Fat Shack International) is involved in any controversy, dispute, or claim. If FSI is a party, the arbitration proceedings will occur in Denver, Colorado, under the rules of the American Arbitration Association (AAA), with a Colorado-resident arbitrator knowledgeable in Colorado law.
However, if FSI is not a party to the controversy, dispute, or claim, the arbitration proceedings will be conducted within the area where the Fat Shack Restaurant is based. In this case, the arbitration will be heard by one arbitrator following the commercial arbitration rules of an arbitration group mutually acceptable to both the franchisee (Company) and the Associate. If they cannot agree on an arbitration group within 30 days after a demand for arbitration, the AAA will conduct the arbitration under its current commercial arbitration rules.
In either scenario, all jurisdictional issues will be decided by the arbitrator. This distinction is important for prospective franchisees as it determines the location and rules governing potential arbitration, which can impact costs and convenience. Franchisees should understand under what circumstances FSI would or would not be a party to a dispute and how that affects the legal proceedings.