For each of the second and subsequent Fat Shack Restaurants developed under the Development Agreement, what is the total Initial Franchise Fee payable?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Development Agreement, you must pay us the Initial Franchise Fee noted above for your first FAT SHACK Restaurant franchise plus a $5,000 fee ("Development Fee") multiplied by the number of additional FAT SHACK Restaurants to be developed. We will credit the Development Fee attributable to the each subsequent FAT SHACK Restaurant to be developed under the Development Agreement to the Initial Franchise Fee due under the Franchise Agreement for such FAT SHACK Restaurant. The total Initial Franchise Fee payable for each of the second and subsequent FAT SHACK Restaurants is $18,000 per franchise. The balance of the Initial Franchise Fee for each FAT SHACK Restaurant you open is due upon your execution of the Franchise Agreement for that FAT SHACK Restaurant. Under the Development Agreement, you must agree to open at least two additional FAT SHACK Restaurants in addition to your first FAT SHACK Restaurant.
Source: Item 5 — Initial Fees (FDD pages 13–15)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the total Initial Franchise Fee payable for each of the second and subsequent Fat Shack restaurants developed under the Development Agreement is $18,000 per franchise. This fee is due upon the execution of the Franchise Agreement for that particular Fat Shack restaurant.
When a franchisee enters into a Development Agreement with Fat Shack, they commit to opening at least two additional Fat Shack restaurants in addition to their first one. For the initial restaurant, the franchisee pays a $35,000 initial franchise fee. For each subsequent restaurant, the initial franchise fee is reduced to $18,000.
In addition to the initial franchise fee, the Development Agreement requires a $5,000 Development Fee multiplied by the number of additional Fat Shack restaurants to be developed. However, this Development Fee is credited towards the Initial Franchise Fee due for each subsequent Fat Shack restaurant. This means that while the franchisee initially pays the Development Fee, it effectively reduces the overall cost of opening subsequent locations. This structure incentivizes multi-unit development by lowering the upfront franchise fee for each additional location beyond the first.