In New York, how does Fat Shack use the initial franchise fee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
New York requires that Fat Shack give you this Disclosure Document at the earlier of the first personal meeting or 10 business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship.
Franchisee agrees to pay to FSI, concurrently with the execution of this Agreement, an initial franchise fee ("Initial Franchise Fee") in the amount set forth in the Addendum. Franchisee acknowledges and agrees that the Initial Franchise Fee represents, in its entirety, payment for FSI's preopening and grand opening support, that FSI has earned the Initial Franchise Fee upon completion of its pre-opening and grand opening support obligations, and that the Initial Franchise Fee is not refundable to Franchisee after it is paid.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, New York requires that Fat Shack provide the disclosure document to prospective franchisees at the earlier of the first personal meeting or 10 business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship.
The document states that the initial franchise fee represents payment for Fat Shack's pre-opening and grand opening support. Fat Shack acknowledges that it has earned the initial franchise fee upon completion of its pre-opening and grand opening support obligations. The document clarifies that the initial franchise fee is not refundable to the franchisee after it is paid to Fat Shack.
This means that a prospective Fat Shack franchisee in New York needs to receive the FDD at least 10 business days before signing any agreement or making any payment. The initial franchise fee compensates Fat Shack for the support provided before the restaurant opens, and once this support is given, the fee is considered non-refundable. This is a standard practice in franchising, where the initial fee covers the franchisor's costs of setting up a new franchisee.