Under what conditions will Fat Shack waive the transfer fee and right of first refusal?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
reasonable time, not to exceed 120 days from the date of death or permanent disability (unless extended by probate proceedings), and shall be subject to all terms and conditions applicable to transfers contained in this Article 17. For purposes of a transfer made pursuant to this Section 17.6, there shall be no transfer fee charged by FSI; provided that FSI reserves the right to charge tuition for any training necessitated by the transfer. Failure to transfer the interest within said period of time shall constitute a breach of this Agreement. The term "permanent disability" shall mean a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent Franchisee (or an owner controlling a Franchisee entity) from supervising the management and operation of the FAT SHACK Restaurant for a period of 120 days from the onset of such disability, impairment or condition. In any event, the FAT SHACK Restaurant shall at all times be managed by a General Manager who has complied with all of FSI's training requirements, regardless of any death or permanent disability covered by this Section 17.6.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the transfer fee is waived in the event of a transfer made due to death or permanent disability of the franchisee. This waiver is applicable if the transfer occurs within a reasonable time, specifically within 120 days from the date of death or permanent disability, although this period may be extended by probate proceedings. However, Fat Shack retains the right to charge tuition for any training that the transferee requires as a result of the transfer.
The term "permanent disability" is defined as a mental or physical condition that prevents the franchisee (or an owner controlling the franchisee entity) from supervising the Fat Shack restaurant's management and operation for at least 120 days from the onset of the disability. Despite any death or disability, the Fat Shack restaurant must always be managed by a General Manager who has met all of Fat Shack's training requirements.
Fat Shack also maintains a right of first refusal for any proposed sale, transfer, or assignment of rights under the Development Agreement. However, the FDD does not explicitly state conditions under which Fat Shack would waive this right of first refusal, besides the death or permanent disability of the franchisee. A prospective franchisee should seek clarification from Fat Shack regarding any other circumstances under which the right of first refusal might be waived.