For Fat Shack, what agreements contain the restrictive covenants applicable during the term of the Development Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
6.1. During the term of this Development Agreement, Franchisee and its officers, partners, directors, agents or employees who have completed FSI's training programs or had access to the
Operations Manual, as described in the Initial Franchise Agreement, and/or the beneficial owners of a 5 percent or greater interest in Franchisee and their respective immediate families, shall be subject to all restrictive covenants as set forth in the Initial Franchise Agreement and in any Nondisclosure and Noncompetition Agreements executed in conjunction with the Initial Franchise Agreement, which covenants by this reference are incorporated herein. Upon termination or expiration of this Development Agreement, Franchisee and its officers, partners, directors, agents or employees who have completed FSI's training programs or had access to the Operations Manual, as described in the Initial Franchise Agreement, and/or the beneficial owners of a 5 percent or greater interest in Franchisee and their respective immediate families, shall be subject to all restrictive covenants as set forth in the franchise agreement related to the last FAT SHACK Restaurant being operated by Franchisee, and in any Nondisclosure and Noncompetition Agreements executed in conjunction with such franchise agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, during the term of the Development Agreement, franchisees, their officers, partners, directors, agents, or employees who have completed Fat Shack's training programs or had access to the Operations Manual, and/or the beneficial owners of a 5 percent or greater interest in the franchisee and their immediate families, are subject to restrictive covenants. These covenants are detailed in the Initial Franchise Agreement and any Nondisclosure and Noncompetition Agreements executed alongside the Initial Franchise Agreement. These covenants are incorporated by reference into the Development Agreement.
Upon termination or expiration of the Development Agreement, the same parties are subject to restrictive covenants as outlined in the franchise agreement related to the last Fat Shack Restaurant operated by the franchisee. Additionally, any Nondisclosure and Noncompetition Agreements executed with that franchise agreement also apply.
This means that a Fat Shack franchisee is bound by non-compete and confidentiality obligations during the term of the Development Agreement and even after it ends. The specific terms of these restrictions are found in the Initial Franchise Agreement and associated Non-disclosure and Non-competition Agreements, as well as the franchise agreement for the last Fat Shack Restaurant operated. Prospective franchisees should carefully review these documents to understand the scope and duration of these restrictive covenants, as they can significantly impact their future business activities.