For a Fat Shack prospective franchisee that is a business entity, who must sign for the 'Prospective Franchisee'?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, partnership, limited liability company or other business entity, the following additional conditions must be met, along with any other conditions as may be established by FSI for entity franchisees:
- a. Contemporaneously with the business entity acquiring the franchise rights, thereafter upon the issuance or transfer of any ownership interests in the business entity or the appointment or election of any person as director, officer, member or manager of the business entity, and at any other time requested by FSI, the shareholders, members, partners, other owners, directors, officers, managers (as applicable), and any other individuals as designated by FSI will execute the Guaranty and Assumption of Franchisee's Obligations attached hereto as Exhibit V and incorporated herein by reference, personally guaranteeing full payment and performance of Franchisee's obligations to FSI and individually undertaking to be bound, jointly and severally, by all the terms of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, if the franchisee is a business entity such as a corporation, limited liability company, or partnership, the agreement must be signed by the company, and include the title and date. Additionally, the shareholders, members, partners, other owners, directors, officers, managers (as applicable), and any other individuals as designated by FSI will execute the Guaranty and Assumption of Franchisee's Obligations attached hereto as Exhibit V and incorporated herein by reference, personally guaranteeing full payment and performance of Franchisee's obligations to FSI and individually undertaking to be bound, jointly and severally, by all the terms of this Agreement.
This requirement ensures that Fat Shack has recourse to the personal assets of the individuals controlling the franchisee entity, not just the business entity's assets. This is a common practice in franchising, as it provides the franchisor with added security and demonstrates the owners' commitment to the business.
Prospective Fat Shack franchisees should carefully review Exhibit V, the Guaranty and Assumption of Franchisee's Obligations, to fully understand the extent of their personal liability. They should also consult with legal and financial advisors to assess the implications of signing such a guarantee.