Who is required to execute the Guaranty and Assumption of Franchisee's Obligations for a Fat Shack franchise?
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 Fat Shack's 2025 Franchise Disclosure Document, if the franchisee is a business entity such as a corporation, partnership, or limited liability company, certain individuals associated with the entity must execute the Guaranty and Assumption of Franchisee's Obligations. These individuals include shareholders, members, partners, other owners, directors, officers, managers, and any other individuals designated by Fat Shack Inc. (FSI).
This guaranty ensures that these individuals personally guarantee the full payment and performance of the franchisee's obligations to Fat Shack. They also individually undertake to be bound, jointly and severally, by all the terms of the Franchise Agreement. This requirement is not only applicable when the business entity initially acquires the franchise rights but also upon the issuance or transfer of any ownership interests in the business entity, or the appointment or election of any person as a director, officer, member, or manager.
This means that prospective Fat Shack franchisees who plan to operate their franchise through a business entity should be aware that they, along with other key individuals involved in the entity, will be required to personally guarantee the franchise obligations. This personal guarantee can have significant financial implications, as it makes these individuals personally liable for the debts and obligations of the franchise. It is a common practice in franchising to have key individuals within an entity provide personal guarantees to ensure the franchisor has recourse beyond the business entity itself.