Does the Fat Shack development agreement prevent FSI from operating in airports?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
I/we specifically acknowledge and understand that under FSI's Franchise Agreement and Area Development Agreement (if applicable), FSI and its affiliates have the right to market, offer, and sell, and to authorize third parties to market, offer, and sell, any and all products and services through venues and channels of distribution other than franchised and company-owned FAT SHACK Restaurants, including but not limited to grocery stores, wholesale distributors, coffee shops, restaurants that are not FAT SHACK Restaurants, offices, hospitality and food service venues, or through retail store display, catalog sales, Internet and other electronic methods, and catering (collectively, "Special Venues and Channels") and in FAT SHACK Restaurants located in facilities with a concentration of foot traffic gathered in a "captive" facility for a primary purpose other than consuming food and beverages ("Captive Audience Venues"), such as airports and other transportation hubs, hospitals, convention centers, grocery stores, department stores, "big box" retail centers, resorts, sports arenas and stadiums, hotels and office buildings, military installations (Army and Air Force Exchange Services), and food courts, without regard to location. I/we acknowledge that (i) the products and services available through Special Venues and Channels and Captive Audience Venues may include those that are the exact same as those which I/we will be granted the right to offer and sell through the FAT SHACK Restaurant, such as "Fat sandwiches," or entirely different services and products; (ii) the Special Venues and Channels and Captive Audience Venues may be in any location, including in close proximity to my/our FAT SHACK Restaurant, or within my/our Protected Territory; (iii) the marketing, offer, and sale of products and services through the Special Venues and Channels and Captive Audience Venues may be under the same or different trademarks and business methods as my/our FAT SHACK Restaurant; and (iv) the prices advertised and charged by FSI and its affiliates for the sale of the products and services to operators of Special Venues and Channels and
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the development agreement does not prevent FSI from operating in airports. FSI retains the right to market, offer, and sell products and services through various venues, including Fat Shack restaurants located in facilities with a concentration of foot traffic gathered in a "captive" facility for a primary purpose other than consuming food and beverages ("Captive Audience Venues"), such as airports and other transportation hubs. This means that Fat Shack itself, or third parties authorized by them, can operate Fat Shack restaurants in airports, regardless of any protected area granted to a franchisee.
This is significant for potential Fat Shack franchisees because it clarifies that their protected area, granted in the Development Agreement, does not extend to locations such as airports. Fat Shack retains the right to operate, or license others to operate, within these "Captive Audience Venues," even if they are within a franchisee's protected territory. This could lead to direct competition within the franchisee's area, although in a non-traditional venue.
Furthermore, the FDD highlights that the products and services offered in these Special Venues and Channels and Captive Audience Venues may be the same as those offered by the franchisee. The marketing and sale of these products and services may also occur under the same or different trademarks and business methods as the franchisee's Fat Shack restaurant. This clause emphasizes that Fat Shack retains considerable freedom to operate outside the traditional franchise model, even within a franchisee's territory, which could impact the franchisee's potential revenue and market share.
Prospective franchisees should carefully consider the implications of these retained rights, assessing the potential impact of Fat Shack operating in non-traditional venues within their market area. It would be prudent to discuss with Fat Shack the company's plans for expansion into these alternative venues and to understand how they intend to manage any potential conflicts or competition with existing franchisees.