What rights does a Fat Shack franchisee have regarding termination and renewal in Washington?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
e and Federal Law
THE PARTIES ACKNOWLEDGE THAT IN THE EVENT THAT THE TERMS OF THIS AGREEMENT REGARDING TERMINATION OR EXPIRATION ARE INCONSISTENT WITH APPLICABLE STATE OR FEDERAL LAW, SUCH LAW SHALL GOVERN FRANCHISEE'S RIGHTS REGARDING TERMINATION OR EXPIRATION OF THIS AGREEMENT. CERTAIN OF THESE LAWS ARE SET FORTH IN THE RIDERS TO FRANCHISE AGREEMENT FOR SPECIFIC STATES AND PROVINCES ATTACHED HERETO AS EXHIBIT VI.
19.11. Assumption of Management
FSI has the right (but not the obligation), under the circumstances described below, to enter the FAT SHACK Restaurant premises and assume the FAT SHACK Restaurant's management for a period not to exceed 90 days. If FSI assumes the FAT SHACK Restaurant's management, Franchisee must pay FSI (in addition to the Royalty and Marketing and Promotion Fee) 3 percent of the FAT SHACK Restaurant's Gross Sales, plus FSI's direct out-of-pocket costs and expenses, during this time. If FSI assumes the FAT SHACK Restaurant's management, Franchisee acknowledges that FSI will have a duty to utilize only reasonable efforts and will not be liable to Franchisee or its owners for any debts, losses, or obligations the FAT SHACK Restaurant incurs, or to any of Franchisee's creditors for any supplies or services the FAT SHACK Restaurant purchases, while FSI manages it. FSI may renew its management of the FAT SHACK Restaurant up to three times for an additional 90 days in each case. FSI will meet with franchisee or its representatives (if available) to discuss the status with franchisee prior to any grant of successor franchise rights.
FSI may assume the FAT SHACK Restaurant's management under the following circumstances:
- a. if Franchisee abandons the FAT SHACK Restaurant; or
- b. if Franchisee fails to comply with any provision of this Agreement and does not cure the failure within the time period FSI specifies in its notice to Franchisee.
The exercise of FSI's rights under subparagraphs a. and b. above will not affect FSI's right to terminate this Agreement.
19.12. Remedies Cumulative
All rights and remedies conferred upon FSI by this Agreement and by law shall be cumulative of each other, and neither the exercise nor the failure to exercise any right or remedy shall preclude the exercise of any other right or remedy.
20. BUSINESS RELATIONSHIP
20.1. Independent Businesspersons
The parties agree that each of them are independent businesspersons, their only relationship is by virtue of this Agreement and that no fiduciary relationship is created hereunder.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the agreement's terms regarding termination or expiration are subject to applicable state or federal law. If there is any inconsistency between the agreement and such laws, the state or federal law will govern the franchisee's rights concerning termination or expiration. The FDD mentions that specific state laws are detailed in Exhibit VI, which includes riders to the franchise agreement for specific states and provinces.
Regarding termination, a Fat Shack franchisee has the right to terminate the agreement if Fat Shack materially breaches the agreement. To do so, the franchisee must provide Fat Shack with written notice of the breach within 60 days of its occurrence, allowing Fat Shack a reasonable opportunity (at least 60 days) to cure the breach. If the breach is curable but requires more than 60 days to reasonably cure, Fat Shack will be granted additional time, provided they are making good faith efforts to resolve the issue.
Concerning renewal, a franchisee in good standing has the option to obtain a successor franchise for three additional terms of five years each after the initial seven-year term. To exercise this option, the franchisee must provide written notice to Fat Shack not more than one year nor less than 180 days before the agreement's expiration. The franchisee must also submit all requested information regarding the Fat Shack restaurant's operations. However, Fat Shack is not obligated to offer a successor franchise if the franchisee fails to comply with the conditions for exercising this option.
Since the excerpt mentions that specific state laws regarding termination are included as an exhibit, a prospective franchisee in Washington should carefully review Exhibit VI of the FDD. This exhibit would provide specific details on how Washington state law might affect the standard termination and renewal terms outlined in the franchise agreement. It would be prudent to consult with a legal professional to fully understand these rights and obligations within the context of Washington law.