What is the maximum Noncompliance Service Charge for the fourth and subsequent notices of noncompliance from Fat Shack?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
rvice Charge
In the event that Franchisee fails to comply with any obligation set forth in this Agreement or any mandatory standard or specification in the Operations Manual or otherwise established by FSI, FSI shall have the right upon written notice to Franchisee to impose a noncompliance service charge ("Noncompliance Service Charge"). The Noncompliance Service Charge may, at FSI's option, immediately be charged by FSI to Franchisee via electronic funds transfer pursuant to Section 12.4 or invoiced to Franchisee for payment within 10 days. If FSI is providing its first written notice to Franchisee of a failure to comply, then no Noncompliance Service Charge shall be imposed, but for the second notice the Noncompliance Service Charge shall be up to $150.00 for each event of noncompliance by Franchisee, for the third notice the Noncompliance Service Charge shall be up to $500.00 for each event of noncompliance by Franchisee, and for the fourth and each subsequent notice the Noncompliance Service Charge shall be up to $1,000.00 for each event of noncompliance by Franchisee, with the exact amount imposed determined by FSI at its discretion. The Noncompliance Service Charge is intended to compensate FSI for the administrative costs that it incurs in monitoring, notifying, and following up with Franchisee in the event of noncompliance. The imposition of the Noncompliance Service Charge is in addition to any other rights or remedies that FSI may have in the event of noncompliance by Franchisee including, without limitation, any right to declare a default or terminate this Agreement as described i
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees may be subject to a Noncompliance Service Charge if they fail to comply with obligations outlined in the Franchise Agreement, Operations Manual, or standards set by Fat Shack. Fat Shack will provide written notice to the franchisee before imposing this charge.
For the first notice of noncompliance, Fat Shack will not impose a Noncompliance Service Charge. However, the second notice carries a charge of up to $150.00 for each instance of noncompliance. The charge increases to up to $500.00 for the third notice.
For the fourth and any subsequent notices of noncompliance, Fat Shack may charge up to $1,000.00 for each event of noncompliance. The exact amount is determined by Fat Shack at its discretion. This charge is intended to cover the administrative costs Fat Shack incurs while monitoring, notifying, and following up with the franchisee regarding the noncompliance.
It is important to note that the Noncompliance Service Charge is in addition to any other legal remedies Fat Shack may pursue, including declaring a default or terminating the Franchise Agreement.