Under the Fat Shack Development Agreement, is FSI responsible for supervising the activities of the Franchisee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.1. During the term of this Development Agreement, Franchisee shall be an independent contractor and shall in no way be considered as an agent, partner or employee of FSI. It is understood and agreed that no agency or partnership is created by this Development Agreement. As such, Franchisee has no authority of any nature whatsoever to bind FSI or incur any liability for or on behalf of FSI or to represent itself as anything other than an independent contractor. Notwithstanding any other provisions in this Development Agreement, FSI shall not be responsible for supervising the activities of Franchisee under this Development Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, under the Development Agreement, Fat Shack International (FSI) is not responsible for supervising the activities of the franchisee. The franchisee operates as an independent contractor and is not considered an agent, partner, or employee of FSI. The agreement explicitly states that no agency or partnership is created, and the franchisee cannot bind FSI or incur liabilities on its behalf.
This means that franchisees have significant autonomy in running their Fat Shack restaurants. However, this independence also comes with responsibility. Franchisees are expected to manage their business in compliance with the Development Agreement and the Operations Manual, ensuring the restaurant is clean, safe, and maintains the brand's reputation. They are also responsible for complying with all applicable laws and regulations, including obtaining necessary licenses and permits.
Furthermore, franchisees are required to indemnify FSI against any claims or liabilities arising from the operation of their Fat Shack restaurants. This underscores the independent nature of the relationship and the franchisee's accountability for their business operations. While Fat Shack does offer support and assistance, the ultimate responsibility for the restaurant's success rests with the franchisee.