Will a Subsequent Franchise Agreement for a Fat Shack restaurant contain the same terms as the Initial Franchise Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.4. Each Subsequent Franchise Agreement to be executed by Franchisee for each FAT SHACK Restaurant to be developed hereunder shall be in the form of Franchise Agreement then generally being offered to franchisees by FSI, which may contain terms subsequently different then the terms of the Initial Franchise Agreement. Notwithstanding the foregoing, FSI agrees that it will not charge an Initial Franchise Fee to Franchisee which is greater than the amounts set forth in Section 2.1. above. Franchisee acknowledges that FSI has the right, however, to charge then current published rates for the required products, royalty percentages, advertising contributions and other fees, products and services offered to Franchisee.
- 3.5. Franchisee acknowledges that FSI shall have the right, in FSI's sole discretion, to waive the initial training program, which is the same as or similar to the training provided under Section 7.1 of the Initial Franchise Agreement, for the second and each subsequent FAT SHACK Restaurant developed under the terms of this Development Agreement. Franchisee may request assistance from FSI in addition to the assistance provided to Franchisee as described in the Initial Franchise Agreement, in connection with site selection, site feasibility studies, lease negotiations and other issues related to development of its Protected Area. If FSI agrees to provide such assistance, in FSI's sole discretion, FSI reserves the right to charge Franchisee for all travel, lodging, living expenses, telephone charges and other identifiable expenses incurred in connection with such assistance, plus a fee based on hourly time spent by any of FSI's employees in connection with such assistance, which fee will be charged in accordance with the then current daily or hourly rates being charged by FSI for assistance.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the terms of a Subsequent Franchise Agreement may differ from those in the Initial Franchise Agreement. While Fat Shack will not charge an Initial Franchise Fee greater than the amount specified in Section 2.1, they retain the right to charge then-current rates for required products, royalty percentages, advertising contributions, and other fees, products, and services. This means that while the initial franchise fee is capped, other costs associated with operating subsequent Fat Shack locations could fluctuate based on the prevailing rates at the time of signing the Subsequent Franchise Agreement.
Additionally, Fat Shack has the discretion to waive the initial training program, which is similar to the training provided under Section 7.1 of the Initial Franchise Agreement, for the second and each subsequent Fat Shack Restaurant developed under the Development Agreement. However, franchisees can request additional assistance from Fat Shack beyond what is provided in the Initial Franchise Agreement, particularly in areas like site selection and lease negotiations. If Fat Shack agrees to provide this additional support, they reserve the right to charge the franchisee for all associated expenses, including travel, lodging, and hourly fees for their employees' time.
In practical terms, this means that franchisees should be prepared for potential changes in fees and requirements when expanding their Fat Shack operations. While the initial franchise fee remains consistent, other operational costs and support services may vary. It is crucial for prospective franchisees to carefully review the terms of each Subsequent Franchise Agreement and understand the potential financial implications of these changes. Franchisees should also inquire about the current rates for products, royalties, and advertising contributions to accurately assess the overall investment required for each new location.