Does the Fat Shack agreement grant franchisees any protected territory?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to Section 3.4 and Section 3.5 of this Agreement regarding Special Venues and Channels and Captive Audience Venues, Franchisee is granted a geographic area around the Restaurant Location (the "Protected Territory") in which FSI will not operate, nor permit a third party to operate, a FAT SHACK Restaurant as long as Franchisee is in substantial compliance with all the provisions of this Agreement. The Protected Territory is an area encompassing a three mile radius around the Restaurant Location as measured from the front door of the Restaurant. A FAT SHACK Restaurant at a Captive Audience Venue does not have a Protected Territory. Because there are exceptions where FSI, its affiliates or other third parties may operate a FAT SHACK Restaurant in Franchisee's Protected Territory, Franchisee's Protected Territory is not considered an exclusive territory.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, franchisees are granted a protected territory. This territory extends three miles in radius from the front door of the restaurant location. Within this protected territory, Fat Shack will not operate or allow third parties to operate another Fat Shack restaurant, provided the franchisee remains in substantial compliance with the franchise agreement.
However, the agreement includes exceptions that significantly limit the exclusivity of this territory. Fat Shack retains the right to market and sell products through various alternative channels, including grocery stores, wholesale distributors, coffee shops, and the internet. They can also establish Fat Shack restaurants in "Captive Audience Venues" such as airports, hospitals, convention centers, and sports arenas, even within a franchisee's protected territory. These Captive Audience Venue Fat Shack restaurants do not have a protected territory.
Because of these exceptions, the FDD states that a franchisee's protected territory is not considered an exclusive territory. This means that while franchisees have some level of geographic protection, Fat Shack retains considerable freedom to operate or license others to operate within the same area through different channels and venues. Prospective franchisees should carefully consider these limitations and how they might affect their business's potential market and revenue.