After termination of the Fat Shack Development Agreement, which franchise agreement determines the restrictive covenants?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration of this Development Agreement, Franchisee and its officers, partners, directors, agents or employees who have completed FSI's training programs or had access to the Operations Manual, as described in the Initial Franchise Agreement, and/or the beneficial owners of a 5 percent or greater interest in Franchisee and their respective immediate families, shall be subject to all restrictive covenants as set forth in the franchise agreement related to the last FAT SHACK Restaurant being operated by Franchisee, and in any Nondisclosure and Noncompetition Agreements executed in conjunction with such franchise agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, upon termination or expiration of the Development Agreement, the restrictive covenants that apply to the franchisee and related parties are those set forth in the franchise agreement related to the last Fat Shack Restaurant being operated by the franchisee. This also includes any Nondisclosure and Noncompetition Agreements associated with that specific franchise agreement.
This means that even after the Development Agreement ends, the franchisee is still bound by certain restrictions, such as not opening a competing business nearby or disclosing confidential information. The specific terms of these restrictions are determined by the franchise agreement for the last Fat Shack location the franchisee operated, not the initial agreement.
For a prospective Fat Shack franchisee, this highlights the importance of carefully reviewing the franchise agreement for each location they develop. The terms of the last franchise agreement will dictate the post-termination obligations, so understanding these terms is crucial for future business planning.