Under what circumstances is Fat Shack not obligated to offer a successor franchise agreement?

According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack is not obligated to offer a successor franchise agreement if the franchisee fails to comply with the conditions of exercising a successor franchise. This means that if a franchisee does not meet the requirements outlined in the franchise agreement for obtaining a renewal, Fat Shack can decline to offer them a new agreement.

These conditions, as detailed in Section 18.4, include executing the current form of the Franchise Agreement, which may have substantially different terms than the original agreement. These differing terms can include changes to royalty and other fee amounts. The franchisee must also not be in default or under notification of breach of the agreement at the time of giving notice for renewal, and must have maintained compliance with all provisions of the agreement during the current term, including timely payments. Compliance is defined as not receiving more than three written notifications of breach from Fat Shack during the term.

Additional conditions include agreeing to upgrade and remodel the Fat Shack restaurant at the franchisee's expense to meet current Operations Manual requirements, executing a successor franchise rider that includes a general release of claims against Fat Shack, and paying a successor franchise fee of $6,000.00 upon each exercise of successor franchise rights. These conditions collectively ensure that franchisees seeking renewal are in good standing, willing to update their restaurant to current standards, and release Fat Shack from potential liabilities.