Under what circumstances can the Fat Shack Franchise Agreement be modified?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
24.1. Modification
- a. This Agreement may only be modified upon execution of a written agreement between FSI and Franchisee or, at FSI's option, upon notice of the approval of a Super-Majority as defined in Section 24.1.b below. Unless prohibited by law or waived by FSI, Franchisee must provide a general release of any and all claims against FSI if Franchisee requests and FSI consents to modify any provisions of this Agreement after it has been signed.
- b. This Agreement may be modified by FSI at its option whenever FSI and a Super-Majority, as hereinafter defined, of franchisees of FSI agree to the modification. A "Super-Majority" of FSI franchisees shall consist of the owners of at least 75 percent of all FAT SHACK Restaurants, or, if only a portion of FAT SHACK Restaurants are affected by the modification, at least 75 percent of those FAT SHACK Restaurants affected by the modification. Whenever a modification is approved by a Super-Majority, FSI may elect to treat the modification as effective to all franchisees or the applicable group thereof, including Franchisee, to the same extent and in the same manner as if the modification was unanimously approved by all applicable Franchisees, and regardless of whether Franchisee may or may not desire to be
bound by the modification. FSI shall provide Franchisee with notice of any modification to this Agreement based on a Super-Majority approval at least 60 days prior to the date such modification is to be effective. By signing this Agreement, Franchisee appoints the officers of FSI as its attorneys in fact with irrevocable power and authority to execute any such modification so approved.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, the Franchise Agreement can be modified under a few specific circumstances. First, Fat Shack and the franchisee can execute a written agreement to modify the Franchise Agreement. If the franchisee requests a modification after the agreement has been signed, Fat Shack may require a general release of claims against them as a condition of consenting to the change, unless prohibited by law or waived by Fat Shack.
Second, Fat Shack can modify the agreement if they and a "Super-Majority" of franchisees agree to the modification. A Super-Majority is defined as the owners of at least 75% of all Fat Shack restaurants, or if the modification only affects a portion of restaurants, at least 75% of those affected restaurants. If a Super-Majority approves a modification, Fat Shack can elect to make it effective for all franchisees, regardless of whether an individual franchisee desires to be bound by it.
Fat Shack must provide franchisees with at least 60 days' notice before any modification based on Super-Majority approval becomes effective. By signing the Franchise Agreement, the franchisee appoints the officers of Fat Shack as their attorneys in fact with the power to execute any modification approved by a Super-Majority. This means that Fat Shack's officers can legally sign the modification on behalf of the franchisee if the required percentage of franchisees agree to it. This clause gives Fat Shack significant power to alter the franchise agreement, as individual franchisees have limited ability to prevent changes approved by the Super-Majority.