You certainly need to readjust the cable tension to get the outer cage to clear the chain. It should clear even in the smallest cog. You may have to adjust the outer limit screw to get the needed travel.
One other possibility is that the cable wasn't installed properly on the fd. The cable should run outside of the little tab next to the fixing bolt. If it runs between the tab and the bolt, the derailleur travel will not be correct. (Ask me how I know this.
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Take it back to the LBS and have them do it right. They certainly should know better.