Which state's law governs the Fat Shack Franchise 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 Franchise Agreement, with some exceptions, is generally governed by Colorado law. Specifically, the document states that the agreement will be interpreted under the laws of the State of Colorado, and any disputes will be governed and determined in accordance with the internal substantive laws of Colorado, not its conflict of law rules. This means that if there is a disagreement between Fat Shack and a franchisee, Colorado law will generally be used to resolve the issue. However, the Colorado Consumer Protection Act does not apply to the agreement or any disputes.
There are exceptions to this rule. The United States Federal Arbitration Act governs all questions about the enforceability of arbitration clauses and the confirmation of any arbitration awards. Additionally, to the extent that a dispute is governed by the United States Trademark Act of 1946 or other United States federal law, those federal laws will take precedence. Furthermore, state-specific riders to the franchise agreement, such as those for Indiana and New York, may include provisions that modify which laws govern specific aspects of the agreement within those states. For example, disputes related to a violation of the Indiana Franchises Act or the Indiana Deceptive Franchise Practices Act will be governed by those laws.
For a prospective Fat Shack franchisee, this means that while Colorado law forms the basis of the agreement, federal laws and state-specific laws (if applicable) can override this. It is important to carefully review Exhibit VI, which contains riders to the Franchise Agreement for specific states and provinces, to understand if any modifications apply to the franchisee's specific location. Franchisees should also be aware that any legal proceedings not subject to mandatory arbitration will have an exclusive venue in the state and federal courts of Colorado, unless Fat Shack brings the proceeding in a court where the Fat Shack Restaurant is located or where the franchisee resides or owns assets.