What are the specific implications of deleting Section 6.9 of the Agreement regarding Commencement of Operations for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee begins operating the FAT SHACK Restaurant without having obtained FSI's prior written consent, as required in Section 6.9.
Unless otherwise agreed in writing by FSI and Franchisee, Franchisee has 12 months from the date of this Agreement (which may be extended for up to a total of $1\frac{1}{2}$ years as provided in Section 6.4) within which to complete the initial training program, described in Section 7.1, and commence operation of the FAT SHACK Restaurant. Franchisee shall obtain the written consent of FSI prior to commencing operation of the FAT SHACK Restaurant, which cannot be granted until FSI has approved the Restaurant Location and the lease, and Franchisee has: (1) successfully completed the initial training program; (2) paid all fees and other amounts due to FSI; (3) furnished FSI with copies of all insurance policies required by this Agreement; (4) built-out and equipped the Restaurant Location in accordance with FSI's standards
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
Based on the 2025 Fat Shack Franchise Disclosure Document, Section 6.9 outlines the requirements and timeline for a franchisee to commence operations. According to this section, a franchisee typically has 12 months from the date of the Franchise Agreement, potentially extendable to $1\frac{1}{2}$ years, to complete the initial training program and begin operating their Fat Shack restaurant. This commencement is contingent upon receiving written consent from Fat Shack, which is granted only after the location and lease are approved, the initial training is successfully completed, all due fees are paid, and the restaurant is built and equipped according to Fat Shack's standards.
If Section 6.9 is deleted, the specific obligations and deadlines for opening the Fat Shack restaurant are removed. This could mean there is no set timeframe within which the franchisee must open the restaurant, potentially leading to delays or uncertainty. Also, the franchisee might not be explicitly required to obtain Fat Shack's written consent before commencing operations, which could lead to the franchisee opening a restaurant that does not meet Fat Shack's standards or without fulfilling all necessary obligations.
Furthermore, the absence of Section 6.9 could affect Fat Shack's ability to terminate the agreement if a franchisee begins operating without prior written consent. Currently, under Section 19.2, Fat Shack has the right to terminate the agreement immediately if the franchisee starts operating the Fat Shack restaurant without obtaining Fat Shack's prior written consent, as required in Section 6.9. The deletion of Section 6.9 would eliminate this specific cause for immediate termination, potentially complicating Fat Shack's enforcement of its operational standards and pre-opening requirements.