What section of the Fat Shack Franchise Agreement covers the franchisee's obligation to provide a personal guarantee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| Obligation | Section in Agreement | Item in Disclosure Document | |
|---|---|---|---|
| (a) Site selection and acquisition/lease | Sections 3.1, 3.2 and Sections 6.1 through 6.4 of Franchise Agreement (“FA”) | It |
Source: Item 9 — Franchisee's Obligations (FDD pages 26–28)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, Item 9 outlines the franchisee's obligations, referencing specific sections within the Franchise Agreement. Regarding the personal guarantee, the relevant section is Section 12.2 and Exhibit V of the Franchise Agreement, as well as Section 1.5 and Exhibit B of the Development Agreement. This obligation is further detailed in Item 15 of the disclosure document.
For a prospective Fat Shack franchisee, this means that the requirement to provide a personal guarantee is explicitly addressed in these sections of the Franchise Agreement and Development Agreement. The personal guarantee likely ensures that the franchisee will personally be liable for the financial obligations of the franchise, even if the franchise is owned by a corporate entity.
It is important for potential franchisees to carefully review Section 12.2 and Exhibit V of the Franchise Agreement, along with Section 1.5 and Exhibit B of the Development Agreement, to fully understand the scope and terms of the personal guarantee. This includes understanding the conditions under which the guarantee can be invoked, the assets that may be at risk, and the duration of the guarantee. Seeking legal counsel to review these documents is advisable to fully grasp the implications of providing a personal guarantee to Fat Shack.