Under what circumstances can Fat Shack impose a Noncompliance Service Charge?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
rvice Charge
In the event that Franchisee fails to comply with any obligation set forth in this Agreement or any mandatory standard or specification in the Operations Manual or otherwise established by FSI, FSI shall have the right upon written notice to Franchisee to impose a noncompliance service charge ("Noncompliance Service Charge"). The Noncompliance Service Charge may, at FSI's option, immediately be charged by FSI to Franchisee via electronic funds transfer pursuant to Section 12.4 or invoiced to Franchisee for payment within 10 days. If FSI is providing its first written notice to Franchisee of a failure to comply, then no Noncompliance Service Charge shall be imposed, but for the second notice the Noncompliance Service Charge shall be up to $150.00 for each event of noncompliance by Franchisee, for the third notice the Noncompliance Service Charge shall be up to $500.00 for each event of noncompliance by Franchisee, and for the fourth and each subsequent notice the Noncompliance Service Charge shall be up to $1,000.00 for each event of noncompliance by Franchisee, with the exact amount imposed determined by FSI at its discretion. The Noncompliance Service Charge is intended to compensate FSI for the administrative costs that it incurs in monitoring, notifying, and following up with Franchisee in the event of noncompliance. The imposition of the Noncompliance Service Charge is in addition to any other rights or remedies that FSI may have in the event of noncompliance by Franchisee including, without limitation, any right to declare a default or terminate this Agreement as described i
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack can impose a Noncompliance Service Charge if a franchisee fails to comply with any obligation outlined in the Franchise Agreement, any mandatory standard or specification in the Operations Manual, or any other requirement established by Fat Shack. Fat Shack will provide written notice to the franchisee before imposing this charge.
However, Fat Shack will not impose a Noncompliance Service Charge for the first written notice of noncompliance. For the second notice, the charge will be up to $150.00 for each instance of noncompliance. The charge increases to up to $500.00 for each noncompliance event after the third notice. For the fourth and each subsequent notice, the Noncompliance Service Charge can be up to $1,000.00 per event, with the exact amount determined by Fat Shack at its discretion.
The Noncompliance Service Charge is intended to cover Fat Shack's administrative costs related to monitoring, notifying, and following up with the franchisee regarding the noncompliance. The imposition of this charge does not limit Fat Shack's other rights and remedies, including the right to declare a default or terminate the Franchise Agreement.