Under what conditions are transfer fees collectable for a Fat Shack franchise in Washington?
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.
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 generally applicable when a franchisee proposes to sell, transfer, or assign their franchise agreement. The franchisee or the proposed transferee must pay Fat Shack's standard transfer fee for each franchise agreement being transferred, along with an additional $5,000 for every undeveloped franchise right for which no Subsequent Franchise Agreement has been executed. This total amount must be paid in a lump sum to Fat Shack as a prerequisite for obtaining their written consent for the transfer. The transferee will also be responsible for paying any remaining portions of the Initial Franchise Fees owed to Fat Shack when each Subsequent Franchise Agreement is signed.
Several pre-conditions must be met before a transfer can occur. Transfers cannot happen before the Fat Shack restaurant has opened for business, and Fat Shack will not approve a transfer if the franchisee is not in full compliance with the franchise agreement. The proposed transferee must also meet Fat Shack's standards for franchisees, including demonstrating good moral character. All outstanding amounts owed by the franchisee to Fat Shack or its affiliates must be paid in full, and all required reports and statements must be submitted. The franchisee must not have violated any provision of the agreement or the restaurant's lease in the 60-day period before requesting consent to transfer.
The proposed transferee must agree to operate the Fat Shack restaurant as a Fat Shack restaurant, sign the then-current form of franchise agreement, and complete the initial training program. The franchisee must provide written notice to Fat Shack at least 30 days before the proposed transfer date, including detailed information about the transfer terms and a written offer from the proposed transferee. The transferee must also provide information sufficient for Fat Shack to assess their business experience, aptitude, and financial qualifications. Unless waived or reduced by Fat Shack, the franchisee must provide a plan for the transferee to receive a minimum of 10 days of on-site assistance, potentially provided by the franchisee or Fat Shack, with a cost of $500 per day if provided by Fat Shack.
There is an exception to transfer fees in the event of death or permanent disability of the franchisee, where the interest must be transferred within a reasonable time, not exceeding 120 days, and is subject to all other transfer terms and conditions. However, Fat Shack reserves the right to charge tuition for any training necessitated by the transfer in such cases. These conditions ensure that Fat Shack maintains control over who operates its franchises and that all financial and operational obligations are met during a transfer.