Is the liability of guarantors for a Fat Shack franchise joint, several, or both?

According to Fat Shack's 2025 Franchise Disclosure Document, the liability of those signing the Guaranty and Assumption of Franchisee's Obligations is joint and several. This is detailed in both Exhibit V to the Franchise Agreement and Exhibit B to the Development Agreement. This means that each guarantor is individually liable for the full amount of the franchisee's obligations, as well as collectively liable with the other guarantors. Fat Shack can pursue any one or all of the guarantors for the full debt or performance.

This has significant implications for anyone acting as a guarantor. If the franchisee fails to meet their obligations, Fat Shack can seek recourse from any guarantor, regardless of whether other guarantors exist or their ability to pay. A guarantor cannot require Fat Shack to first pursue the franchisee or any other guarantor before seeking payment or performance from them.

Furthermore, the guarantor waives several rights, including the right to receive notice of acceptance of the guaranty, demand for payment, or notice of default. They also waive the right to require Fat Shack to take action against the franchisee first. The guarantor's obligations are not contingent upon Fat Shack pursuing remedies against the franchisee or any other person. This underscores the seriousness of acting as a guarantor, as the individual is taking on substantial risk.

For entity franchisees, Fat Shack requires that shareholders, members, partners, other owners, directors, officers, managers, and any other individuals designated by Fat Shack execute the Guaranty and Assumption of Franchisee's Obligations, binding them jointly and severally to the terms of the agreement. This ensures that Fat Shack has multiple avenues for recourse in case of default, strengthening their position and reducing their risk.