Is the Fat Shack lease conditionally assigned to the franchisor?

According to Fat Shack's 2025 Franchise Disclosure Document, the lease agreement for the restaurant location is conditionally assigned to Fat Shack as security for the franchisee's performance under the Franchise Agreement. This means that while the franchisee initially holds the lease, it is also pledged to Fat Shack, giving them certain rights related to the property. The franchisee is responsible for obtaining the landlord's consent to this conditional assignment. A standard form of Conditional Assignment of Lease is included as an attachment to the FDD.

Fat Shack requires that the primary lease contains specific provisions that grant them rights as the franchisor. These provisions include that the lease term, including any renewals with specified rent, must be at least seven years. The lease must also grant consent for the franchisee to use Fat Shack's marks and signage. Fat Shack must have the right to enter the premises to make modifications to protect their marks and licensed methods.

Furthermore, Fat Shack, or their designee, has the option to assume the franchisee's occupancy rights without the landlord's approval if the franchisee defaults under the lease or Franchise Agreement, or if either the lease or Franchise Agreement is terminated. In such cases, Fat Shack has the right to assign the lease or sublet the premises for the remainder of the lease term. The landlord must also agree to provide Fat Shack with notice of any default and an opportunity to cure it. Finally, the lease must include a use provision acceptable to Fat Shack, ensuring that only a Fat Shack restaurant can be operated on the premises without their prior written consent.