What is the purpose of the Royalty fee for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty1 | 6% of your Gross Sales2 | Payable weekly on Tuesday of each week based on the prior week's Gross Sales | The Royalty is for the ongoing grant of the rights to use the Marks and Licensed Methods, and on-going support. We will debit your bank account for the Royalty.3 You must meet minimum Sales Quota. See Item 12. |
Source: Item 6 — Other Fees (FDD pages 15–18)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the royalty fee is 6% of gross sales. This fee is payable weekly on Tuesday of each week, based on the prior week's gross sales. Fat Shack will debit the franchisee's bank account for the royalty fee.
The royalty fee serves as compensation to Fat Shack for the ongoing grant of rights to use the brand's marks and licensed methods. It also covers the ongoing support that Fat Shack provides to its franchisees. Franchisees must also meet minimum sales quotas, as detailed in Item 12 of the FDD.
It is common in the franchise industry for royalty fees to cover the use of intellectual property and ongoing support. The 6% royalty charged by Fat Shack is within the typical range for restaurant franchises, but prospective franchisees should evaluate the specific services and support provided by Fat Shack in exchange for this fee to ensure it aligns with their needs and expectations. Understanding the details of Item 12 regarding minimum sales quotas is also crucial, as failure to meet these quotas could have consequences for the franchisee.