What are 'Special Venues and Channels' in the context of Fat Shack franchise agreements?

According to Fat Shack's 2025 Franchise Disclosure Document, 'Special Venues and Channels' refer to alternative distribution methods through which Fat Shack can market and sell its products, independently of franchised restaurants. These venues include grocery stores, wholesale distributors, coffee shops, restaurants that are not Fat Shack locations, offices, hospitality and food service venues. Fat Shack also utilizes retail store displays, catalog sales, the Internet, and other electronic methods, as well as catering, to reach customers through these special channels.

Fat Shack retains the right to market, offer, and sell products and services through these Special Venues and Channels, regardless of their location, including within a franchisee's protected territory. This means that Fat Shack can operate or authorize third parties to operate these alternative distribution channels even in areas where a franchisee has been granted a protected territory. The products and services offered through these venues may be the same as or different from those offered at a franchised Fat Shack restaurant.

For a prospective franchisee, this means that Fat Shack retains significant control over distribution channels and can introduce competition within or near a franchisee's territory without compensation to the franchisee. The prices in these Special Venues and Channels may also differ from those at franchised locations. Fat Shack may use different trademarks or methods for these alternative channels. This lack of exclusivity and potential for internal competition is a notable risk for franchisees to consider.