How is the Minimum Sales Quota defined in relation to a Fat Shack Restaurant?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Beginning on the earlier of (i) the opening of the FAT SHACK Restaurant, or (ii) 1½ years from the date of this Agreement, and for each 12-month period thereafter (each period being a "Sales Quota Year"), Franchisee must generate a minimum in Gross Sales (the "Minimum Sales Quota") in the FAT SHACK Restaurant as follows:
"Gross Sales" shall be defined as sales of any kind for all services or products from or through the FAT SHACK Restaurant, including any such sale of services or products made for cash or upon credit, or partly for cash and partly for credit, regardless of collection of charges for which credit is given, regardless of whether such sale is conducted in compliance with or in violation of the terms of this Agreement and regardless of whether such sale is at the Restaurant Location or off-site, but exclusive of discounts, sales taxes or other similar taxes and credits. "Gross Sales" shall include delivery fees and revenue from the redemption of FAT SHACK gift certificates, customer loyalty cards, gift cards and other prepaid cards. "Gross Sales" shall also include the fair market value of any services or products received by Franchisee in barter or exchange for its services and products.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee must achieve a Minimum Sales Quota. This quota begins either when the Fat Shack restaurant opens or 1.5 years from the date of the Franchise Agreement, whichever occurs first. After this initial period, the Minimum Sales Quota applies for each subsequent 12-month period, referred to as a 'Sales Quota Year'.
'Gross Sales,' which determine whether a franchisee meets the Minimum Sales Quota, include all sales of services or products from the Fat Shack restaurant. This encompasses sales made for cash or credit, regardless of whether the charges are collected and whether the sales comply with the Franchise Agreement. Gross Sales also include sales made at the restaurant location or off-site, delivery fees, and revenue from gift certificates, loyalty cards, and other prepaid cards. The fair market value of any services or products received in barter or exchange is also included in Gross Sales.
However, Gross Sales exclude discounts, sales taxes, and other similar taxes and credits. The specific monetary amount of the Minimum Sales Quota is not defined in this section of the Franchise Disclosure Document. A prospective franchisee should inquire about the specific Minimum Sales Quota amount to fully understand the sales expectations and financial obligations associated with operating a Fat Shack franchise.