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

According to Fat Shack's 2025 Franchise Disclosure Document, even after the termination or expiration of the Development Agreement, a franchisee is not entirely free of obligations. Specifically, the franchisee remains bound by the provisions outlined in Article 6 of the Development Agreement, which pertain to nondisclosure and covenants not to compete. This means that even after the agreement ends, the franchisee cannot disclose confidential information about Fat Shack's operations or engage in competitive activities that could harm the brand.

Furthermore, the franchisee must still adhere to the terms and conditions of any and all franchise agreements that were executed in furtherance of the Development Agreement, provided those franchise agreements have not also been terminated or expired. This indicates that if the franchisee has active Fat Shack restaurant franchise agreements, those agreements remain in effect with all their associated obligations, regardless of the Development Agreement's status.

This continued obligation is a standard practice in franchising to protect the franchisor's brand, trade secrets, and market position. Prospective Fat Shack franchisees should carefully review Article 6 of the Development Agreement and all individual franchise agreements to fully understand the scope and duration of these post-termination obligations. Understanding these ongoing responsibilities is crucial for planning future business ventures after the Development Agreement concludes.