Under what condition are Fat Shack transfer fees collectable?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
orporated herein by reference.
- 5.3. In the event of any proposed sale, transfer or assignment by Franchisee as described herein, Franchisee and/or the proposed transferee shall pay to FSI the standard transfer fee for each franchise agreement to be transferred, as governed by such franchise agreement executed pursuant to this Development Agreement, plus $5,000.00 for every undeveloped franchise right for which no Subsequent Franchise Agreement has been executed. This sum shall be payable in lump sum to FSI as one of the preconditions to obtaining FSI's written consent to any proposed transfer. In the event of transfer, the transferee shall pay the remaining portions of the Initial Franchise Fees owed to FSI, when each Subsequent Franchise Agreement is signed. Transfer fees paid to FSI will not be applied to the Initial Franchise Fees due, but the transferee will receive credit for Franchisee's earlier payment of the Development Fees.
- 5.4. A condition of FSI's approval of a transfer of this Development Agreement is that Franchisee must transfer all of its interest under this Development Agreement, and shall not be permitted to transfer any portion of this Development Agreement separate and apart from the remainder of this Development Agreement. Any transfer shall include the rights to all Franchise Agreements entered into between FSI and Franchisee hereunder. Franchisee and the transferee shall comply with the requirements under each Franchise Agreement entered into between FSI and Franchisee for the transfer of each such Franchise Agreement, including the payment of the applicable transfer fee for each Franchise Agreement.
- 5.5. Franchisee may transfer one or more of the individual Franchise Agreements or any interest in those Franchise Agreements, or all or a substantial portion of the assets of the FAT SHACK Restaurants associated with such Franchise Agreements without a transfer of its interest under this Development Agreement in accordance with the terms of each such Franchise Agreement, provided that the FAT SHACK Restaurant(s) associated with the Franchise Agreement(s) being transferred are open and operating as of the date of the transfer (a "Franchise Transfer"). In that event, (i)
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, transfer fees are collectable in the event of any proposed sale, transfer, or assignment by the franchisee. Both the franchisee and/or the proposed transferee are responsible for paying Fat Shack the standard transfer fee for each franchise agreement to be transferred. If the franchisee has a Development Agreement, they must also pay $5,000 for every undeveloped franchise right for which no Subsequent Franchise Agreement has been executed. This payment is a precondition for obtaining Fat Shack's written consent to the proposed transfer.
Fat Shack requires that the franchisee transfer all interests under the Development Agreement and does not allow for partial transfers. Any transfer must include the rights to all Franchise Agreements between Fat Shack and the franchisee. The franchisee and transferee must comply with the requirements of each Franchise Agreement, including paying the applicable transfer fee for each agreement.
However, a transfer fee is not charged by Fat Shack in the event of a transfer made pursuant to death or permanent disability, but Fat Shack reserves the right to charge tuition for any training necessitated by the transfer. The Fat Shack restaurant must be open and operating as of the date of the transfer for a Franchise Transfer to occur.