During the term of affiliation, can an associate for Fat Shack perform services for a Competitive Business?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
mation.
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- Noncompetition Covenant. Associate covenants and agrees that, during the term of his or her Affiliation, except while conducting Company's business in a manner authorized by FSI and Company, Associate shall not, either directly or indirectly through any member of Associate's immediate family, separate business entity or otherwise:
- a. have any direct or indirect interest as a disclosed or beneficial owner in a "Competitive Business," as defined below;
- b. perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business;
- c. divert or attempt to divert any business related to, or any customer or account of Company's FAT SHACK Restaurant, FSI's business, or any other FSI franchisee's business; or
- d. divert or attempt to divert the employment of any employee of Company, FSI, FSI's affiliates, or another FSI franchisee, to any Competitive Business.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, an associate is restricted from performing services for a Competitive Business during their affiliation with the company. The document states that an associate cannot perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, except while conducting Fat Shack's business in a manner authorized by Fat Shack and FSI.
This restriction is part of a noncompetition covenant that Fat Shack imposes on its associates. This covenant aims to protect Fat Shack's confidential information, business interests, and relationships with its customers and employees. The term "Competitive Business" is defined as any business operating a restaurant deriving more than 10 percent of its gross receipts from the sale of sandwiches, burgers, and wings, excluding alcohol sales.
However, there is an exception: an associate is not prohibited from owning securities in a Competitive Business if the securities are listed on a stock exchange or traded over-the-counter and represent 2 percent or less of the outstanding securities. This exception allows associates to make minor investments in publicly traded competitors without violating the noncompetition agreement.
This noncompetition covenant remains in effect during the associate's affiliation with Fat Shack. After the affiliation ends, a separate post-termination covenant applies, further restricting the associate's involvement with Competitive Businesses within a specific radius of Fat Shack locations for a period of two years.