How many times can FSI renew its management of a Fat Shack restaurant, and for what duration is each renewal?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
FSI has the right (but not the obligation), under the circumstances described below, to enter the FAT SHACK Restaurant premises and assume the FAT SHACK Restaurant's management for a period not to exceed 90 days. If FSI assumes the FAT SHACK Restaurant's management, Franchisee must pay FSI (in addition to the Royalty and Marketing and Promotion Fee) 3 percent of the FAT SHACK Restaurant's Gross Sales, plus FSI's direct out-of-pocket costs and expenses, during this time. If FSI assumes the FAT SHACK Restaurant's management, Franchisee acknowledges that FSI will have a duty to utilize only reasonable efforts and will not be liable to Franchisee or its owners for any debts, losses, or obligations the FAT SHACK Restaurant incurs, or to any of Franchisee's creditors for any supplies or services the FAT SHACK Restaurant purchases, while FSI manages it. FSI may renew its management of the FAT SHACK Restaurant up to three times for an additional 90 days in each case. FSI will meet with franchisee or its representatives (if available) to discuss the status with franchisee prior to any grant of successor franchise rights.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, FSI (presumably Fat Shack International) has the right to assume management of a Fat Shack restaurant under certain circumstances, such as abandonment by the franchisee or failure to comply with the franchise agreement. The initial period for which FSI can assume management is up to 90 days.
FSI has the option to renew its management of the Fat Shack restaurant up to three times. Each renewal period is for an additional 90 days. This means that, under the conditions specified in the franchise agreement, FSI could potentially manage a Fat Shack location for a total of up to 360 days (90 days initially, plus three 90-day renewals).
During any period that FSI manages the Fat Shack restaurant, the franchisee is required to pay FSI 3% of the restaurant's gross sales, in addition to the standard royalty and marketing fees. The franchisee must also cover FSI's direct out-of-pocket costs and expenses incurred during the management period. This arrangement could create a significant financial burden for the franchisee while FSI is in control.
It's important to note that while FSI is managing the restaurant, they are only required to utilize reasonable efforts and will not be liable for any debts, losses, or obligations the restaurant incurs. This could leave the franchisee vulnerable to financial risks during FSI's management period. Additionally, the FDD states that FSI will meet with the franchisee or its representatives to discuss the status prior to any grant of successor franchise rights.