What obligations does the Fat Shack franchisee remain subject to after termination or expiration of the Development Agreement?

According to the 2025 Fat Shack Franchise Disclosure Document, following the termination or expiration of the Development Agreement, a franchisee must still adhere to the non-disclosure and non-compete clauses outlined in Article 6 of the Development Agreement. This means the franchisee cannot reveal confidential information about Fat Shack's operations or compete with Fat Shack in any way that violates the agreement. These obligations exist in addition to the terms and conditions of any franchise agreements that were executed as part of the Development Agreement, provided those franchise agreements have not also been terminated or expired.

This is a standard practice in franchising, as franchisors need to protect their trade secrets and brand reputation even after a franchisee leaves the system. The non-disclosure agreements prevent franchisees from using proprietary information to start a competing business or share it with others. The non-compete agreements limit the franchisee's ability to open a similar business in the same geographic area for a certain period of time, preventing them from directly competing with existing Fat Shack locations.

It is important for prospective Fat Shack franchisees to carefully review Article 6 of the Development Agreement to fully understand the scope and duration of these post-termination obligations. Franchisees should also be aware that these obligations apply in addition to any similar provisions in their individual franchise agreements. Understanding these restrictions is crucial for planning future business ventures after the Development Agreement ends.