What happens to existing Fat Shack franchise agreements in the Protected Area when a development agreement is in effect?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as set forth in Section 1.3 below, FSI shall not establish, nor shall it license any other party to establish, FAT SHACK Restaurants using the Marks and Licensed Methods anywhere within the Protected Area for so long as this Development Agreement is in effect. Notwithstanding the foregoing, there may be existing Franchise Agreements in effect as of the date of this Development Agreement under which FSI has granted rights to third parties to operate FAT SHACK Restaurants in the Protected Area (the "Existing Stores"). Franchisee agrees and acknowledges that the Franchise Agreements for such Existing Stores may remain in effect, and nothing in this Development Agreement shall prevent, prohibit, or restrict the operations of such Existing Stores. FSI may renew the Franchise Agreements or enter into successor Franchise Agreements for such Existing Stores.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack FDD, a Development Agreement allows a franchisee to develop multiple Fat Shack restaurants within a specific geographic area. However, Fat Shack may have pre-existing franchise agreements in place within that same protected area.
Specifically, the FDD states that existing franchise agreements remain in effect, and the Development Agreement does not prevent, prohibit, or restrict the operations of these existing stores. Fat Shack retains the right to renew these existing franchise agreements or enter into successor agreements for those stores. This means a developer may not have exclusive rights to the entire protected area if other Fat Shack franchises already operate there.
This is a crucial consideration for potential Fat Shack developers. While a Development Agreement grants the right to open multiple locations, it doesn't override prior commitments Fat Shack has made to other franchisees. A developer needs to be aware of any existing Fat Shack restaurants within their protected area and understand that these restaurants will continue to operate, potentially impacting the developer's market share and revenue projections. It is important to investigate the existing Fat Shack locations and their performance before entering into a Development Agreement.