Are Fat Shack Restaurants opened under a Development Agreement subject to the terms of the then-current Franchise Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Each FAT SHACK Restaurant opened under a Development Agreement is subject to the terms and conditions of the then-current Franchise Agreement, the terms of which are as discussed above as of the date of this Disclosure Document. Nothing in the Development Agreement prevents, prohibits, or otherwise restricts at any time the operation of any FAT SHACK Restaurants in the Protected Area which are operated under any existing franchise agreements, or the renewal of franchise rights related to such existing franchise agreements. As such, you will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Under the Development Agreement, you will be required to enter into a separate franchise agreement for each of the FAT SHACK Restaurants to be developed by the deadlines designated in a development schedule specified in the Development Agreement. You must also maintain and continue to operate a certain number of FAT SHACK Restaurants in the Protected Area in accordance with the development schedule. If you fail to meet the development schedule, then we may terminate your Development Agreement. The termination of your Development Agreement solely for a failure to meet the development schedule will not terminate or affect your rights or obligations under any franchise agreements entered into between you and us prior to the date of termination of the Development Agreement.
Source: Item 12 — Territory (FDD pages 36–39)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, each Fat Shack Restaurant opened under a Development Agreement is indeed subject to the terms and conditions of the then-current Franchise Agreement. This means that franchisees developing multiple locations under a Development Agreement must adhere to the Franchise Agreement terms in place at the time each individual restaurant is opened.
This is a standard practice in franchising, ensuring consistency across all Fat Shack locations. However, it's important to note that the terms of the Franchise Agreement could evolve over the course of the Development Agreement. Therefore, a franchisee might be operating different Fat Shack locations under slightly different versions of the Franchise Agreement, depending on when each location was opened.
The FDD also clarifies that the Development Agreement does not prevent Fat Shack from operating or renewing franchises within the franchisee's protected area. This means that even with a Development Agreement, a franchisee will not receive an exclusive territory and may face competition from other franchisees or company-owned outlets. If a franchisee fails to meet the development schedule outlined in the Development Agreement, Fat Shack has the right to terminate the agreement. However, such termination does not affect the rights or obligations under any existing Franchise Agreements already in place for opened locations.