Which state's law governs the Fat Shack Development Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
22.5. Governing Law/Consent to Jurisdiction/Waiver of Jury Trial
The United States Federal Arbitration Act shall govern all questions about the enforceability of Sections 22.1 and 22.2 and the confirmation of any arbitration awards pursuant to such procedures, and no arbitration issues are to be resolved pursuant to any other statutes, regulations or common law. Otherwise, except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et seq.) or other United States federal law, this Agreement shall be interpreted under the laws of the State of Colorado and any dispute between the parties shall be governed by and determined in accordance with the internal substantive laws, and not the laws of conflict, of the State of Colorado, which laws shall prevail in the event of any conflict of law. Notwithstanding the foregoing, the parties agree that the Colorado Consumer Protection Act (COLO. REV. STAT. ANN. Sections 6-1-101, et seq.) shall not apply to this Agreement or any disputes between the parties. Franchisee and FSI have negotiated regarding a forum in which to resolve any disputes that arise between them and have agreed to select a forum in order to promote stability in their relationship. Therefore, if a claim is asserted in any legal proceeding not subject to mandatory arbitration, as specified in Section 22.1, involving Franchisee, and the Franchisee Affiliates, on the one side, and FSI and the FSI Affiliates, on the other side, both parties agree that the exclusive venue for disputes between them shall be in the state and federal courts of Colorado, and each waive any objection either may have to the personal jurisdiction of or venue in the state and federal courts of Colorado. Notwithstanding the foregoing, any legal proceeding by FSI or any FSI Affiliate not subject to mandatory arbitration may be brought in any court of competent jurisdiction in the country, state, province, or other geographic area in which the FAT SHACK Restaurant is located or in which Franchisee or any Franchisee Affiliate resides or owns assets. IF A CLAIM MAY BE BROUGHT IN COURT, THEN FSI, THE FSI AFFILIATES, FRANCHISEE AND THE FRANCHISEE AFFILIATES EACH WAIVE THEIR RIGHTS TO A TRIAL BY JURY.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the Development Agreement is generally interpreted under Colorado law. Specifically, the document states that, except when superseded by the U.S. Trademark Act or other federal law, the laws of Colorado govern the interpretation of the agreement and any disputes. This includes the internal substantive laws of Colorado, not its conflict of law rules, which are to prevail in case of any conflict.
However, there are exceptions to this rule. Disputes related to mandatory arbitration, as specified in Section 22.1 of the agreement, will be governed by the United States Federal Arbitration Act. Additionally, any legal proceeding by Fat Shack not subject to mandatory arbitration can be brought in any court of competent jurisdiction where the Fat Shack restaurant is located or where the franchisee resides or owns assets.
It is important to note that the Colorado Consumer Protection Act does not apply to the Development Agreement or any disputes arising from it. Franchisees also waive their rights to a jury trial if a claim may be brought in court. This governing law provision ensures that the Development Agreement is interpreted and enforced primarily under Colorado law, with specific exceptions for federal law and arbitration-related matters.