What is the radius, in miles, that defines the geographic scope of the non-compete agreement for a Fat Shack franchise?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
venant Not to Compete
For a period of two years from termination or expiration of this Agreement for any reason, or the date on which Franchisee ceases to conduct business, whichever is later, neither Franchisee nor any Bound Party shall have any direct or indirect interest as a disclosed or beneficial owner, investor, partner, director, officer, employee, consultant, representative or agent or in any other capacity in any Competitive Business located or operating within a 10-mile radius of the former Restaurant Location or within a 10-mile radius of any other franchised or company-owned FAT SHACK Restaurant. If Franchisee or any other Bound Party breaches this section, the two-year period shall start on the date that such person is enjoined from competing or stops competing, whichever is later. Franchisee and the Bound Parties expressly acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting such skills. Consequently, enforcement of the covenants made in this section will not deprive them of their personal goodwill or ability to earn a living.
21.3.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the post-termination non-compete agreement restricts a franchisee from engaging in a Competitive Business within a specific radius. This restriction applies for two years following the termination or expiration of the Franchise Agreement, or the date the franchisee ceases business operations, whichever occurs later.
The agreement specifies that neither the franchisee nor any related parties can have any direct or indirect interest in a Competitive Business operating within a 10-mile radius of the former Fat Shack Restaurant location. This restriction also extends to a 10-mile radius of any other Fat Shack Restaurant, whether franchised or company-owned.
The document defines a "Competitive Business" as any establishment that derives more than 10% of its gross receipts (excluding alcohol sales) from selling sandwiches, burgers, and wings. However, the franchisee is permitted to own securities in a Competitive Business if those securities are publicly traded and represent 2% or less of the outstanding securities. If the franchisee violates this agreement, the two-year non-compete period will restart from the date they are legally stopped from competing or when they voluntarily cease the competitive activity, whichever is later.