What is the maximum interest rate a Fat Shack franchisee will be required to pay on late payments?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event of any default on the part of either party to this Development Agreement, in addition to all other remedies, the party in default will pay the aggrieved party all amounts due and all damages, costs and expenses, including reasonable attorneys' fees, incurred by the aggrieved party in any legal action, arbitration or other proceeding as a result of such default, plus interest at the highest rate allowable by law, accruing from the date of such default.
This same interest rate shall apply as the postjudgment interest rate, regardless of the applicable statutory rate, in the event of any legal actions related to this Development Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, if a franchisee defaults on the Development Agreement, they will be required to pay interest at the highest rate allowable by law, accruing from the date of such default. This applies to all amounts due, damages, costs, and expenses, including reasonable attorneys' fees, incurred by Fat Shack in any legal action, arbitration, or other proceeding resulting from the default. This interest rate also applies as the post-judgment interest rate, regardless of the applicable statutory rate, in the event of any legal actions related to the Development Agreement.
This means that a Fat Shack franchisee could face significant financial penalties for late payments or other defaults under the Development Agreement. The specific interest rate will depend on the applicable laws at the time of the default, but it could be a substantial amount. This provision is designed to protect Fat Shack's financial interests and ensure that franchisees comply with the terms of the Development Agreement.
Prospective Fat Shack franchisees should be aware of this provision and carefully consider their ability to meet their financial obligations under the Development Agreement. It is advisable to consult with an attorney or financial advisor to fully understand the potential implications of this clause. Understanding the maximum interest rate and planning accordingly is crucial for managing the financial risks associated with the franchise.