Under what circumstances can a Fat Shack franchisee terminate the franchise agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
18.1. Term
The primary term of this Agreement is for a period of seven years from the Effective Date, unless sooner terminated as provided herein. Franchisee agrees to operate the FAT SHACK Restaurant for the entire term of this Agreement.
18.2. Continuation
If Franchisee continues to operate the franchise and its FAT SHACK Restaurant with FSI's express or implied consent, following the expiration or termination of this Agreement, the continuation will be a month-to-month extension of this Agreement. This Agreement will then be terminable by either party upon 30 days written notice. Otherwise, all provisions of this Agreement will apply while the operations continue.
18.3. Exercise of Option for Successor Franchise
Provided Franchisee is not in default hereunder either at the time of its notice of exercise of successor franchise rights or at the time of the grant of the successor franchise rights, at the end of the initial term hereof Franchisee will have the option to obtain a successor franchise for three additional terms of five years each, by acquiring successor franchise rights in accordance with the terms of this Section 18.3 and Section 18.4 below, unless FSI declines to offer a successor franchise in accordance with Section 18.5 below. Franchisee may exercise its option for a successor franchise by giving written notice of such exercise to FSI not more than one year nor less than 180 days prior to the scheduled expiration of the Agreement. With the notice of exercise of its successor franchise rights, Franchisee shall submit to FSI all information requested by FSI regarding the operations of the FAT SHACK
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee has limited rights to terminate the franchise agreement. The primary term of the agreement is seven years, during which the franchisee is expected to operate the Fat Shack restaurant.
A franchisee can terminate the agreement if Fat Shack materially breaches the agreement. To do so, the franchisee must provide Fat Shack with written notice of the breach within 60 days of its occurrence, giving Fat Shack a reasonable opportunity, but not less than 60 days, to cure the breach. If the breach is curable but cannot be reasonably resolved within 60 days, and Fat Shack is making good faith efforts to cure it, they will be granted additional time to resolve the issue, preventing immediate termination. Any termination by the franchisee that does not follow these guidelines will be considered a termination without cause, and the restaurant will be deemed abandoned.
If a franchisee continues to operate the Fat Shack restaurant after the expiration or termination of the agreement with Fat Shack's consent, it becomes a month-to-month extension, terminable by either party with 30 days' written notice. This continuation ensures that both parties can exit the arrangement with reasonable notice while maintaining the agreement's provisions during the extended operation.