Is the liability of each guarantor under the Fat Shack franchise agreement joint, several, or both?

According to Fat Shack's 2025 Franchise Disclosure Document, the liability of each guarantor is both joint and several. Specifically, Exhibit V to the Franchise Agreement states that each guarantor's direct and immediate liability is joint and several. This means that Fat Shack can pursue one, some, or all of the guarantors for the full amount of the franchisee's obligations.

For a prospective Fat Shack franchisee, this is a significant consideration. If the franchisee is an entity such as a corporation or LLC, Fat Shack typically requires the owners or principals to sign a personal guarantee. This guarantee makes those individuals personally liable for the business's debts and obligations under the Franchise Agreement.

The joint and several liability clause in Fat Shack's guaranty agreement means that if one guarantor has limited assets, Fat Shack can pursue the other guarantors for the entire outstanding debt. This protects Fat Shack but places a substantial risk on the guarantors, who could be responsible for more than their pro rata share of the debt. Franchisees should carefully consider the implications of this clause and seek legal counsel to fully understand their obligations and potential liabilities.