Does the Target Area designation grant any territorial rights to a Fat Shack franchisee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
If, as of the date you sign your Franchise Agreement, you do not have the Restaurant Location chosen and approved by us, we will designate, by Addendum to the Franchise Agreement, a "Target Area" within which to find a Restaurant Location. The designation of the Target Area does not in any manner grant you any continuing territorial rights in or to the Target Area.
Source: Item 12 — Territory (FDD pages 36–39)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the designation of a Target Area does not grant any territorial rights to the franchisee. If a franchisee has not yet secured an approved Restaurant Location when signing the Franchise Agreement, Fat Shack will designate a Target Area to help the franchisee find a suitable location. However, this Target Area designation is solely for location scouting and does not provide any exclusive or protected rights within that area. Once a Restaurant Location is approved, a Protected Territory is granted.
After the Restaurant Location is approved by Fat Shack, the franchisee is granted a Protected Territory, which is a geographic area around the Restaurant Location. Within this Protected Territory, Fat Shack will not operate or permit a third party to operate another Fat Shack Restaurant, provided the franchisee remains in substantial compliance with the Franchise Agreement. The Protected Territory typically encompasses a three-mile radius around the Fat Shack Restaurant, measured from the front door. However, Fat Shack Restaurants located in Captive Audience Venues do not receive a Protected Territory.
It is important to note that Fat Shack franchisees do not receive an exclusive territory. Franchisees may face competition from other franchisees, outlets owned by Fat Shack, or other channels of distribution or competitive brands controlled by Fat Shack. Fat Shack retains the right to market, offer, and sell products and services through various venues and channels, including Special Venues and Channels and Captive Audience Venues, even within a franchisee's Protected Territory, without providing any compensation to the franchisee.