Who administers the Marketing and Promotion Fund for Fat Shack?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
follows:
a. The Marketing and Promotion Fund will be administered by FSI and may be used for production and placement of media advertising, direct response literature, direct mailings, brochures, radio and television advertising, collateral advertising material, surveys of advertising effectiveness, development of Internet websites, or other advertising or public relations expenditures relating to advertising FAT SHACK Restaurants services and products, providing professional services, materials, and personnel to support the marketing function, and creating, producing, and implementing websites for FSI and/or its franchisees. FSI will direct all advertising and promotional programs, with the sole and absolute right of approval over agencies, spokespersons, creative concepts, materials, media placements and allocations used in the programs. Franchisee agrees that the Marketing and Promotion Fund is intended to maximize
general public recognition and acceptance of the Marks for the benefit of all FAT SHACK franchisees (the "System"), that it may be used for marketing, advertising, production and media expenses, and that FSI and its designees undertake no obligation in administering the Marketing and Promotion Fund to ensure that Franchisee benefits directly or pro rata from the placement of advertising.
- b. FSI is entitled to receive from the Marketing and Promotion Fund reimbursement for expenses, overhead and employee salaries for services provided, and rent for office space provided to employees administrating the fund. FSI may place advertising rather than engage an advertising agency for this purpose. FSI is entitled to receive a fee for such services, which will not exceed the highest rate charged for similar services by any recognized advertising agency not owned in whole or part by FSI or its officers, directors, or employees (in addition to reimbursement for costs incurred).
- c. If the advertising expenditure is less than the total of all Marketing and Promotion Fees collected during any calendar year, FSI will retain those contributions for use in subsequent years. If the advertising expenditure is more than the Marketing and Promotion Fees collected during any calendar year, FSI may advance funds to the Marketing and Promotion Fund on such terms that are no more favorable than the Marketing and Promotion Fund could receive from other lending sources generally available to the Marketing and Promotion Fund, and FSI will be reimbursed from the Marketing and Promotion Fund during the same or subsequent years to the extent of such advances.
- d. FSI has the right to deposit into the Fund any advertising, marketing, or similar allowances paid by suppliers who deal with FAT SHACK Restaurants, in FSI's sole discretion. FAT SHACK Restaurants that FSI or its affiliates own will contribute to the Fund on the same basis as franchisees.
- e. FSI will prepare an annual unaudited summary report on the operation of the Marketing and Promotion Fund, and will make it available to Franchisee, upon written request, no later than 120 days after the end of each calendar year.
- f. Any FAT SHACK Restaurant owned and operated by FSI or its affiliates will pay Marketing and Promotion Fees to the Marketing and Promotion Fund on a basis at least equal to that paid by franchisees.
- g. FSI retains the right to terminate the Marketing and Promotion Fund at any time.
- h. FSI has no fiduciary obligation to Franchisee in connection with the operation of the Marketing and Promotion Fund. FSI will not be liable for any act or omission with respect to the operation of the Marketing and Promotion Fund or use of the Marketing and Promotion Fees that is consistent with this Agreement and is done in good faith. FSI may cause the Marketing and Promotion Fund to be incorporated or operated through a separate entity, at such time as FSI deems appropriate, and such successor entity, if established, will have all rights and duties of FSI with respect to the Marketing and Promotion Fund as specified in this section.
13.4. Local Advertising
FSI currently does not require its franchisees to conduct any specific local advertising of their FAT SHACK Restaurants, although FSI recommends that that they do advertise their Restaurant businesses.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the Marketing and Promotion Fund is administered by FSI (presumably Fat Shack International) and may be used for various advertising and public relations expenditures. These include media advertising, direct response literature, direct mailings, brochures, radio and television advertising, collateral advertising material, surveys of advertising effectiveness, and the development of Internet websites. The fund can also cover professional services, materials, and personnel to support the marketing function, as well as the creation, production, and implementation of websites for both FSI and its franchisees. FSI has the sole and absolute right of approval over all aspects of advertising and promotional programs, including agencies, spokespersons, creative concepts, materials, media placements, and allocations.
FSI is entitled to receive reimbursement from the Marketing and Promotion Fund for expenses, overhead, employee salaries for services provided, and rent for office space provided to employees administering the fund. FSI may also place advertising directly instead of engaging an advertising agency and is entitled to a fee for such services, which cannot exceed the highest rate charged by any recognized advertising agency not owned by FSI or its officers, directors, or employees, in addition to reimbursement for costs incurred.
If advertising expenditure is less than the total Marketing and Promotion Fees collected during any calendar year, FSI will retain the contributions for use in subsequent years. Conversely, if advertising expenditure exceeds the collected fees, FSI may advance funds to the Marketing and Promotion Fund, to be reimbursed from the fund in the same or subsequent years. FSI also has the right to deposit advertising, marketing, or similar allowances paid by suppliers into the Fund, and Fat Shack Restaurants owned by FSI or its affiliates will contribute to the Fund on the same basis as franchisees. FSI will provide an annual unaudited summary report on the fund's operation to franchisees upon written request, no later than 120 days after each calendar year's end. FSI retains the right to terminate the Marketing and Promotion Fund at any time and has no fiduciary obligation to franchisees in connection with its operation.