Under what circumstances can FSI assume management of a Fat Shack restaurant?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
FSI has the right (but not the obligation), under the circumstances described below, to enter the FAT SHACK Restaurant premises and assume the FAT SHACK Restaurant's management for a period not to exceed 90 days. If FSI assumes the FAT SHACK Restaurant's management, Franchisee must pay FSI (in addition to the Royalty and Marketing and Promotion Fee) 3 percent of the FAT SHACK Restaurant's Gross Sales, plus FSI's direct out-of-pocket costs and expenses, during this time. If FSI assumes the FAT SHACK Restaurant's management, Franchisee acknowledges that FSI will have a duty to utilize only reasonable efforts and will not be liable to Franchisee or its owners for any debts, losses, or obligations the FAT SHACK Restaurant incurs, or to any of Franchisee's creditors for any supplies or services the FAT SHACK Restaurant purchases, while FSI manages it. FSI may renew its management of the FAT SHACK Restaurant up to three times for an additional 90 days in each case. FSI will meet with franchisee or its representatives (if available) to discuss the status with franchisee prior to any grant of successor franchise rights.
FSI may assume the FAT SHACK Restaurant's management under the following circumstances:
- a. if Franchisee abandons the FAT SHACK Restaurant; or
- b. if Franchisee fails to comply with any provision of this Agreement and does not cure the failure within the time period FSI specifies in its notice to Franchisee.
The exercise of FSI's rights under subparagraphs a. and b. above will not affect FSI's right to terminate this Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, FSI (presumably Fat Shack International) has the right, but not the obligation, to assume management of a Fat Shack restaurant under specific circumstances. These circumstances include if the franchisee abandons the restaurant or if the franchisee fails to comply with any provision of the Franchise Agreement and does not correct the failure within the time period specified by FSI in a notice.
If FSI assumes management, it can do so for a period not exceeding 90 days. During this time, the franchisee is required to pay FSI 3% of the restaurant's gross sales, in addition to the standard royalty and marketing fees. The franchisee must also cover FSI's direct out-of-pocket costs and expenses incurred during the management period. FSI can renew its management of the Fat Shack restaurant up to three times, each for an additional 90 days.
The document states that FSI will only be required to utilize reasonable efforts while managing the restaurant and will not be liable for any debts, losses, or obligations the restaurant incurs during their management. Additionally, FSI is not liable to the franchisee's creditors for any supplies or services purchased during this period. Prior to granting any successor franchise rights, FSI will meet with the franchisee or their representatives to discuss the status of the restaurant.
It is important to note that FSI's right to assume management does not affect its right to terminate the Franchise Agreement. All rights and remedies available to FSI are cumulative, meaning that exercising one right does not prevent them from exercising any other right or remedy.