Does the Fat Shack Franchise Agreement grant an exclusive territory to the franchisee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
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
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 (ii) in FAT SHACK Restaurants located in captive audience venues (collectively, "Captive Audience Venue"). Examples of Captive Audience Venue locations include 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.
Source: Item 12 — Territory (FDD pages 36–39)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees do not receive an exclusive territory. However, Fat Shack grants a "Protected Territory," which is a geographic area around the restaurant location where 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. This Protected Territory typically encompasses a three-mile radius around the restaurant, measured from the front door.
However, this Protected Territory does not apply to Captive Audience Venues such as airports, hospitals, convention centers, grocery stores, and hotels. Fat Shack reserves the right to market, offer, and sell products and services through these venues, as well as through other channels of distribution like grocery stores, coffee shops, and the internet, even within a franchisee's Protected Territory. These alternative channels, termed "Special Venues and Channels," may offer the same or similar products, potentially creating competition for the franchisee.
Fat Shack also retains the right to use and license others to use the Fat Shack marks and methods at any location outside the franchisee's Protected Area, excluding Captive Audience Venue outlets. They can also use alternative proprietary marks or methods for other businesses that may be similar to Fat Shack restaurants. This means that while a franchisee has some territorial protection, Fat Shack retains considerable flexibility to expand its brand through various channels and venues, which could impact a franchisee's market share.
The Development Agreement for franchisees who obtain the right to operate multiple Fat Shack Restaurants does not prevent, prohibit, or otherwise restrict at any time the operation of any Fat Shack Restaurants in the Protected Area which are operated under any existing franchise agreements, or the renewal of franchise rights related to such existing franchise agreements. As such, franchisees will not receive an exclusive territory and may face competition from other franchisees, from outlets that Fat Shack owns, or from other channels of distribution or competitive brands that Fat Shack controls.