What is the purpose of the Successor Franchise Rider to the Fat Shack Inc. Franchise Agreement?

According to the 2025 Fat Shack Franchise Disclosure Document, a Successor Franchise Rider is part of the process for a franchisee to renew their franchise agreement for additional terms. Specifically, the franchisee must execute a successor franchise rider in the form then in use by Fat Shack, which (unless prohibited by law) includes a general release of any and all claims against Fat Shack, its affiliates, and their respective officers, directors, employees, and agents.

To be eligible for a successor franchise, the Fat Shack franchisee must not be in default or under notification of breach of the existing agreement when they give notice of their intent to renew. They also must have maintained compliance with all provisions of the agreement during the current term, including timely payments of all royalty fees and other payments due. Compliance means the franchisee should not have received more than three written notifications of breach from Fat Shack during the term.

Other prerequisites include, if Fat Shack chooses, the franchisee must execute the form of Franchise Agreement then in use by Fat Shack, which may have substantially different terms, including changes to royalty and other fee amounts, and changes to the number of options remaining to be exercised. The franchisee may also be required to upgrade and remodel the Fat Shack Restaurant at their own expense to conform with the then-current Operations Manual requirements. The franchisee must also pay a $6,000 successor franchise fee upon each exercise of the successor franchise rights and any other fees set forth in the successor franchise rider to cover Fat Shack's expenses related to reviewing the franchisee's operations and approving the option. Finally, the franchisee, or its General Manager, must successfully complete a refresher operations training program provided by Fat Shack or an authorized third party, unless waived by Fat Shack, with the franchisee responsible for all travel and living expenses associated with attendance.