What legend must be conspicuously printed on all outstanding certificates of ownership for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- c. The business entity shall maintain stop transfer instructions against the transfer of ownership on its records subject to the restrictions of this Agreement and shall have all outstanding certificates of ownership endorsed with the following legend printed conspicuously upon the face of each certificate:
The transfer of the shares represented by this certificate is subject to the terms and conditions of a certain Franchise Agreement with Fat Shack Inc..
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, if the franchisee is a business entity, specific conditions must be met regarding ownership interests. One of these conditions involves a legend that must be conspicuously printed on all outstanding certificates of ownership. This legend states that the transfer of shares represented by the certificate is subject to the terms and conditions of the Franchise Agreement with Fat Shack Inc. This requirement ensures that any potential transfer of ownership is explicitly tied to the existing franchise agreement, providing Fat Shack with control over who becomes a franchisee.
This requirement is in place to protect Fat Shack's interests by ensuring that any changes in ownership of the franchise entity are subject to their approval. By mandating this legend, Fat Shack aims to prevent unauthorized transfers of ownership that could potentially compromise the brand's standards or introduce individuals or entities that do not meet their criteria for franchisees. This also allows Fat Shack to maintain consistent standards and practices across all franchise locations.
For a prospective Fat Shack franchisee, this means that if they operate their franchise through a corporation, partnership, or LLC, they must ensure that all ownership certificates include the specified legend. This is not merely a formality but a critical requirement that Fat Shack enforces to maintain control over its brand and franchise network. Failure to comply with this requirement could potentially lead to breaches of the franchise agreement and possible termination of the franchise.