Are the rights granted in the Fat Shack Development Agreement exclusive?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that the rights granted in this Development Agreement are nonexclusive.
Franchisee acknowledges that 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 (i) 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") and (ii) in FAT SHACK Restaurants located in captive audience venues (collectively, "Captive Audience Venue").
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the rights granted in the Development Agreement are nonexclusive. While Fat Shack grants the franchisee the right to develop Fat Shack restaurants within a defined geographic area (the Protected Area), Fat Shack retains certain rights for itself and its affiliates. This means that even within the Protected Area, Fat Shack can market, offer, and sell products and services through various alternative channels.
These alternative channels include venues other than franchised or company-owned Fat Shack restaurants, such as grocery stores, wholesale distributors, coffee shops, restaurants that are not Fat Shack restaurants, offices, hospitality and food service venues. Fat Shack can also sell through retail store displays, catalogs, the Internet, other electronic methods, and catering services. Additionally, Fat Shack retains the right to operate Fat Shack restaurants in captive audience venues, even within the franchisee's Protected Area.
This non-exclusive arrangement has important implications for prospective Fat Shack developers. While they are granted a Protected Area for development, Fat Shack retains considerable freedom to operate and license others to operate through alternative channels within that same area. This could potentially lead to competition for the franchisee's restaurants from other sources bearing the Fat Shack brand. Franchisees should carefully consider the potential impact of these alternative channels on their business and revenue projections.