What is the geographic limit 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
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, a franchisee is granted a Protected Territory, which is a geographic area around the restaurant location. Specifically, the Protected Territory encompasses a three-mile radius around the Fat Shack restaurant, measured from the front door of the restaurant. During the term of the Development Agreement, Fat Shack will not establish, nor license any other party to establish, Fat Shack Restaurants using the Marks and Licensed Methods anywhere within the Protected Area except in Captive Audience Venues. However, this Protected Territory is not exclusive, meaning franchisees may face competition from other franchisees, company-owned outlets, or other channels of distribution.
There are exceptions to the Protected Territory. Fat Shack retains the right to market, offer, and sell products and services through various venues and channels of distribution, such as grocery stores, coffee shops, and the internet, regardless of location, including within a franchisee's Protected Territory. Additionally, Fat Shack Restaurants located in Captive Audience Venues, such as airports, hospitals, and sports arenas, do not have a Protected Territory. These alternative channels and Captive Audience Venues may offer the same or similar products and services as the franchised Fat Shack Restaurant, potentially impacting the franchisee's sales.
It's important to note that the continuation of a franchisee's rights within the Protected Territory depends on substantial compliance with the Franchise Agreement, but not on achieving a certain sales volume, market penetration, or other contingency, other than meeting the Sales Quota. The franchisee can advertise their Fat Shack Restaurant in any geographic area and serve all customers who enter their restaurant, but they cannot change the restaurant's location without Fat Shack's written consent. Furthermore, the franchisee does not have the right to make sales through alternative channels of distribution.