As a Fat Shack franchisee, am I prohibited from attempting to divert business from other Fat Shack franchisees?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
mpetition During Term
Franchisee acknowledges that, in addition to the license of the Marks hereunder, FSI has also licensed commercially valuable information which comprises and is a part of the Licensed Methods, including without limitation operations, marketing, advertising and related information and materials, and that the value of this information derives not only from the time, effort and money which went into its compilation, but from the usage by all franchisees of FSI using the Marks and Licensed Methods. Franchisee therefore agrees that other than the FAT SHACK Restaurant licensed herein, neither Franchisee nor any of Franchisee's officers, directors, shareholders, managers, members or partners, nor any immediate family member of Franchisee or any of these individuals ("Bound Parties"), shall during the term of this Agreement:
- a. have any direct or indirect interest as a disclosed or beneficial owner in a "Competitive Business" as defined below;
- b. perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business, wherever located or operating;
- c.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, as a franchisee, you are restricted from diverting business away from other Fat Shack franchisees. During the term of the Franchise Agreement, you are prohibited from diverting or attempting to divert any business related to the Fat Shack Restaurant, FSI's business, or any other Fat Shack franchisee. This includes direct inducement or any other means of diverting business.
This restriction ensures that franchisees operate ethically and do not undermine each other's businesses within the Fat Shack system. It protects the collective value of the brand and the investments made by individual franchisees in building their customer base. This type of clause is standard in franchise agreements to maintain a fair and collaborative network.
Additionally, franchisees are prohibited from diverting or attempting to divert the employment of any employee of FSI or another franchisee licensed by FSI to use the Marks and Licensed Methods, to any Competitive Business. This prevents franchisees from poaching employees from other locations to work at a competitive business.