What right does FSI grant to the franchisee regarding Fat Shack Restaurants in the Protected Area?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to Section 3.4 and Section 3.5 of this Agreement regarding Special Venues and Channels and Captive Audience Venues, Franchisee is granted a geographic area around the Restaurant Location (the "Protected Territory") in which FSI will not operate, nor permit a third party to operate, a FAT SHACK Restaurant as long as Franchisee is in substantial compliance with all the provisions of this Agreement. The Protected Territory is an area encompassing a three mile radius around the Restaurant Location as measured from the front door of the Restaurant. A FAT SHACK Restaurant at a Captive Audience Venue does not have a Protected Territory. Because there are exceptions where FSI, its affiliates or other third parties may operate a FAT SHACK Restaurant in Franchisee's Protected Territory, Franchisee's Protected Territory is not considered an exclusive territory.
3.3. Limitation on Franchise Rights
The rights granted to Franchisee are for the specific Restaurant Location and cannot be transferred to any other location, except with FSI's prior written approval. The Marks and Licensed Methods are licensed only for the Restaurant Location. If Franchisee elects to move or relocate the Restaurant Location at any time during the term of this Agreement, Franchisee shall submit information about the proposed Restaurant Location to FSI for approval in accordance with the terms of Section 6.1 and other provisions of this Agreement and shall simultaneously pay FSI a "Relocation Fee" that is equal to 25 percent of the then-current Initial Franchise Fee for a first FAT SHACK Restaurant.
3.4. FSI's Sales Through Special Venues and Channels
FSI reserves the right for itself and its affiliates to market, offer, and sell, and to authorize third parties to market, offer, and sell, any and all products and services through venues and channels of distribution other than franchised and company-owned FAT SHACK Restaurants, including but not limited to grocery stores, wholesale distributors, coffee shops, restaurants that are not FAT SHACK Restaurants, offices, hospitality and food service venues, or through retail store display, catalog sales, Internet and other electronic methods, and catering (collectively, "Special Venues and Channels"). The
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee is granted a geographic area around their restaurant location, referred to as the "Protected Territory." Fat Shack will not operate, nor permit a third party to operate, a Fat Shack Restaurant within this territory, so long as the franchisee remains in substantial compliance with the franchise agreement. The Protected Territory extends three miles in radius from the front door of the restaurant. However, this protection is subject to certain exceptions.
Fat Shack retains the right to market, offer, and sell products and services through various alternative channels, including grocery stores, wholesale distributors, coffee shops, and internet sales, even within the franchisee's Protected Territory. These are referred to as "Special Venues and Channels". Fat Shack also reserves the right to operate Fat Shack Restaurants in "Captive Audience Venues" such as airports, hospitals, and sports arenas, without granting any protected territory to those locations.
Because of these exceptions, the franchisee's Protected Territory is not considered an exclusive territory. Fat Shack also retains the right to use and license others to use their marks and methods for Fat Shack Restaurants outside the Protected Territory, as well as to use alternative proprietary marks for other businesses, even if those businesses are similar to Fat Shack Restaurants. These stipulations mean that while a franchisee has some territorial protection, Fat Shack retains considerable freedom to operate and license its brand in various other venues and channels, even within the franchisee's general vicinity.