Are the recitals at the beginning of the Fat Shack agreement binding on the parties?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
RECITALS
- A. FSI has developed methods for establishing, operating and promoting specialty quick service sandwich restaurants under the name Fat Shack® that features "Fat Sandwiches," burgers and wings, together with appetizers, desserts, hot and cold beverages, and related merchandise, for dine in, takeout and delivery, and specializes in late night delivery of its products to its customers ("FAT SHACK Restaurants") associated with the service mark "FAT SHACK" and other logos, trademarks, service marks and commercial symbols ("Marks") and FSI's proprietary methods of doing business ("Licensed Methods").
- B. Franchisee would like to use FSI's Marks and Licensed Methods in connection with the development of a certain number of FAT SHACK Restaurants (which shall not be less than two FAT SHACK Restaurants in addition to the FAT SHACK Restaurant to be opened pursuant to the Initial Franchise Agreement), in a specific geographical area as set forth in the addendum attached hereto as Exhibit A attached hereto ("Addendum"). FSI desires to grant Franchisee the right to establish and operate such FAT SHACK Restaurants under the terms and conditions which are contained in this Development Agreement.
The parties therefore agree as follows:
1. GRANT OF DEVELOPMENT RIGHTS
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
Based on the 2025 Fat Shack Franchise Disclosure Document, the provided excerpts contain recitals within both the Development Agreement and the Nondisclosure and Noncompetition Agreement. Recitals typically provide background information and the intent of the parties entering into an agreement. However, the excerpts do not explicitly state whether these recitals are legally binding on the parties.
For the Development Agreement, the recitals (A and B) outline Fat Shack's business model and the franchisee's desire to develop Fat Shack restaurants within a specific area. Similarly, the Nondisclosure and Noncompetition Agreement includes recitals (A, B, C, and D) that describe Fat Shack's business, its proprietary methods, the franchisee's status, and the associate's potential access to confidential information.
Because the FDD excerpts do not specify the binding nature of these recitals, it is important for a prospective Fat Shack franchisee to seek clarification from the franchisor or legal counsel. Understanding whether these recitals have legal weight can impact the interpretation and enforcement of the agreements. A franchisee should inquire about the legal implications of any inaccuracies or changes in the circumstances described in the recitals.