Can Fat Shack use alternative proprietary marks for other businesses that are similar to Fat Shack restaurants?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
FSI further retains the rights, among others, to: (1) use, and license others to use, the Marks and Licensed Methods in connection with the operation of a FAT SHACK Restaurant at any location other than in the Protected Area, other than Special Venues and Channels and Captive Audience Venue outlets; (2) use and license the use of alternative proprietary marks or methods in connection with the operation of other businesses under names which are not the same as or confusingly similar to the Marks, which businesses may be the same as, or similar to, or different from FAT SHACK Restaurants; (3) establish alternative channels of distribution for the products and services sold in a FAT SHACK Restaurant, which may include marketing and distribution of the products and services through grocery stores, convenience stores, restaurants that are not FAT SHACK Restaurants, via the Internet, catalog sales, and other direct marketing sales channels, which may or may not use the Marks; and (4) engage in any other activities not expressly prohibited in this Agreement or the Franchise Agreement, in each case, at any location, including in your Protected Area, and in each case, on any terms and conditions as FSI deems advisable, without granting Franchisee any rights in them.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack retains the right to use and license alternative proprietary marks or methods for other businesses. These businesses can operate under names that are not the same as or confusingly similar to the Fat Shack marks. These other businesses may be the same as, similar to, or different from Fat Shack restaurants. This means Fat Shack can operate or franchise similar concepts under different brand names.
This clause gives Fat Shack considerable flexibility to expand into related markets without directly competing with its franchisees under the Fat Shack name. It also allows Fat Shack to test new concepts or cater to different market segments using different branding, without impacting the established Fat Shack brand.
For a prospective franchisee, this highlights a potential risk. Fat Shack could introduce a competing brand in the market, although it would operate under a different name and proprietary marks. While these businesses would not use the 'Fat Shack' name, they could still offer similar products or services, potentially drawing customers away from existing Fat Shack locations. Franchisees should consider this possibility and evaluate the potential impact on their business when making their investment decision. It would be prudent to discuss Fat Shack's plans for other brands or concepts during the due diligence process.