Upon termination or expiration of the Fat Shack Development Agreement, is the franchisee entitled to a refund of any fees?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.5. In the event of termination or expiration of this Development Agreement for any reason, Franchisee shall not be entitled to any refund of any portion of the fees paid hereunder. Franchisee shall remain subject to the provisions of Article 6 of this Development Agreement regarding nondisclosure and covenants not to compete, in addition to the terms and conditions of any and all franchise agreements executed in furtherance of this Development Agreement which have not also been terminated or expired. No right or remedy herein conferred upon or reserved by FSI is exclusive of any other right or remedy provided or permitted by law or equity.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, a franchisee is not entitled to any refund of fees paid under the Development Agreement upon termination or expiration, regardless of the reason for termination. This policy is explicitly stated in Section 4.5 of Item 23.
This means that any fees paid to Fat Shack for development rights are nonrefundable. This includes the Development Fee, which is $5,000 for each additional Fat Shack Restaurant to be opened under the Development Agreement, as detailed in Section 2.1. Even if the Development Agreement is terminated by the franchisee with 60 days' notice, as permitted in Section 4.2, no fees will be refunded.
This non-refundability clause is a significant financial consideration for prospective Fat Shack developers. Franchisees should carefully evaluate their ability to meet the development schedule and other obligations under the Development Agreement, as failure to do so will not result in a refund of any paid fees. This is a fairly standard practice in franchising, as initial fees are generally used to cover the franchisor's initial expenses in setting up the franchisee.