Does Fat Shack retain the right to engage in activities not expressly prohibited in the franchise agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
FSI further retains the rights, among others, to: (1) use, and license others to use, the Marks and Licensed Methods in connection with the operation of a FAT SHACK Restaurant at any location other than in the Protected Area, other than Special Venues and Channels and Captive Audience Venue outlets; (2) use and license the use of alternative proprietary marks or methods in connection with the operation of other businesses under names which are not the same as or confusingly similar to the Marks, which businesses may be the same as, or similar to, or different from FAT SHACK Restaurants; (3) establish alternative channels of distribution for the products and services sold in a FAT SHACK Restaurant, which may include marketing and distribution of the products and services through grocery stores, convenience stores, restaurants that are not FAT SHACK Restaurants, via the Internet, catalog sales, and other direct marketing sales channels, which may or may not use the Marks; and (4) engage in any other activities not expressly prohibited in this Agreement or the Franchise Agreement, in each case, at any location, including in your Protected Area, and in each case, on any terms and conditions as FSI deems advisable, without granting Franchisee any rights in them.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack retains specific rights regarding the brand and its distribution channels. Fat Shack can use and license the Fat Shack trademarks and methods outside a franchisee's protected area, except in special venues, channels, and captive audience venues. Fat Shack can also use different proprietary marks for other businesses, even those similar to Fat Shack, and establish alternative distribution channels like grocery stores or internet sales, regardless of whether these channels use Fat Shack's marks.
Most importantly, Fat Shack retains the right to engage in any activities not expressly prohibited in the franchise agreement or the Development Agreement. These activities can occur at any location, including a franchisee's protected area, and under any terms Fat Shack deems advisable, without granting the franchisee any rights to them.
This clause gives Fat Shack broad latitude to pursue business opportunities, even if they potentially compete with existing franchisees, as long as those activities aren't explicitly forbidden in the franchise agreement. This could include introducing new products, services, or distribution methods that impact a franchisee's business. A prospective franchisee should carefully consider this clause and discuss with Fat Shack what activities might fall under this provision and how they could affect their franchise.