After termination of the Fat Shack franchise agreement, can an associate disclose confidential information to a competitive business?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Use and Disclosure of Confidential Information. Associate acknowledges that, in connection with Associate's Affiliation with Company, FSI or Company will disclose in strict confidence certain Confidential Information necessary for the operation of a FAT SHACK Restaurant. Associate specifically acknowledges that the Confidential Information is valuable, unique and comprises a key portion of the assets of FSI; and Associate agrees that he or she will not utilize all or any portion of the same for Associate's personal benefit during the term of Associate's Affiliation with Company, nor in any manner use the same subsequent to the termination of Associate's Affiliation with Company or the termination or expiration of the Franchise Agreement, nor disclose any of the same to any person, firm, corporation or other entity whatsoever, including but not limited to a Competitive Business, as defined below, at any time for any reason or purpose, without the prior written consent of FSI. Associate shall not copy, publish or otherwise duplicate the Confidential Information or permit others to do so and shall return all Confidential Information to FSI or Company upon termination of Associate's Affiliation with Company. Associate may disclose to other employees, agents, or representatives of FSI or Company the Confidential Information only to the extent necessary for such employees, agents or representatives to carry out their intended function. Associate acknowledges that any unauthorized disclosure or use of the Confidential Information would be wrongful and would cause irreparable injury and harm to Company. Associate further acknowledges that Company has expended a great amount of effort and money in obtaining and developing the Confidential Information, that Company has taken numerous precautions to guard the secrecy of the Confidential Information and that it would be very costly for competitors to acquire or duplicate the Confidential Information.
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 prohibited from disclosing confidential information to a competitive business both during and after their affiliation with the company. The associate acknowledges that this confidential information is valuable and unique to Fat Shack and comprises a key portion of their assets.
The agreement explicitly states that the associate cannot use this information for personal benefit during their affiliation. Furthermore, they are restricted from using or disclosing this information to any entity, including a competitive business, after the termination of their affiliation or the franchise agreement. This restriction is in place regardless of the reason or purpose of the disclosure, and it requires obtaining prior written consent from FSI (Fat Shack Inc.) before any disclosure can occur.
The associate is also prohibited from copying or publishing the confidential information and must return all confidential information to FSI or the company upon termination of their affiliation. The agreement allows disclosure of confidential information to other employees, agents, or representatives of FSI or the company, but only to the extent necessary for them to perform their duties. Unauthorized disclosure or use of confidential information is considered wrongful and would cause irreparable harm to Fat Shack.
This clause is designed to protect Fat Shack's investment in developing its confidential information and to prevent competitors from gaining an unfair advantage by acquiring or duplicating this information. Prospective franchisees should understand the breadth of this restriction and ensure that their employees or associates are fully aware of their obligations regarding confidential information, both during and after their association with the Fat Shack franchise.