What is the definition of the Protected Territory granted to a Fat Shack franchisee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to the paragraph below regarding Captive Audience Venues and Special Venues and Channels noted below, you will be granted a geographic area around your Restaurant Location (the "Protected Territory") in which we will not operate, nor permit a third party to operate, a FAT SHACK Restaurant as long as you are in substantial compliance with all the provisions of the Franchise Agreement. The Protected Territory is an area encompassing a three mile radius around the FAT SHACK Restaurant as measured from the front door of the Restaurant. A FAT SHACK Restaurant at a Captive Audience Venue does not have a Protected Territory.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
We reserve the right, regardless of location, including a location within your Protected Territory, for us and our affiliates to market, offer, and sell, and to authorize third parties to market, offer, and sell, any and all products and services (i) through venues and channels of distribution other than franchised
Source: Item 12 — Territory (FDD pages 36–39)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee may be granted a Protected Territory, which is defined as a geographic area around the restaurant location. This area extends three miles in radius, measured from the front door of the Fat Shack restaurant. Within this Protected Territory, Fat Shack will not operate or permit a third party to operate another Fat Shack restaurant, provided the franchisee remains in substantial compliance with the Franchise Agreement. However, this Protected Territory does not apply to Fat Shack restaurants located in Captive Audience Venues.
It is important to note that Fat Shack franchisees do not receive an exclusive territory. They may face competition from other franchisees, company-owned outlets, alternative distribution channels, or competitive brands controlled by Fat Shack. Fat Shack retains the right to market, offer, and sell products and services through various venues and channels, including grocery stores, convenience stores, and online platforms, even within a franchisee's Protected Territory. These alternative channels, referred to as Special Venues and Channels, may operate under different trademarks and may offer products and services similar to those of the franchised Fat Shack restaurant.
Prospective Fat Shack franchisees should understand that while a Protected Territory offers some level of geographic exclusivity, it is subject to several limitations. The presence of Captive Audience Venues and the franchisor's right to utilize alternative distribution channels within the territory can introduce competition. Franchisees should carefully consider these factors and evaluate the potential impact on their restaurant's performance. Additionally, franchisees should be aware of the sales quota requirements, as failure to meet these quotas can lead to termination of the Franchise Agreement.