How do Fat Shack franchisees pay the Marketing and Promotion Fee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
FSI may in its sole discretion, conduct regional, national or international advertising to promote the FAT SHACK brand and system generally, and charge its franchisees for this service. FSI reserves the right, upon not less than 30 days' notice to Franchisee, to require Franchisee to pay to FSI an advertising, marketing and promotion fee ("Marketing and Promotion Fee") in an amount designated in the notice, up to a maximum of 1½ percent of the total amount of Franchisee's weekly Gross Sales. FSI may change the percentage of the Marketing and Promotion Fee upon 30 days' notice to Franchisee, but it shall not increase the Marketing and Promotion Fee above 1½ percent of Franchisee's weekly Gross Sales during the term of this Agreement. The Marketing and Promotion Fee, once due, is payable weekly, concurrent with the payment of the Royalty in accordance with Article 5 above, by electronic transfer of funds pursuant to the Authorization Agreement for preauthorized payment described in Section 5.4, and is nonrefundable once it is paid. The Marketing and Promotion Fee is also subject to the same administrative fee, late charge and interest as the Royalty Fee, as set forth above. If and when collected, the Marketing and Promotion Fee will be deposited into a separate bank account, commercial account or savings account ("Marketing and Promotion Fund"), which will be administered as follows:
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 Fee, if implemented by Fat Shack, is payable weekly, concurrent with the royalty payments. These payments are made via electronic transfer of funds, utilizing a preauthorized payment agreement as detailed in Section 5.4 of the agreement. Once paid, the Marketing and Promotion Fee is nonrefundable.
The Marketing and Promotion Fee is subject to the same administrative fees, late charges, and interest as the royalty fee. This means that any late payments or administrative issues related to the Marketing and Promotion Fee will be handled in the same manner as with royalty payments, ensuring consistency in financial obligations.
Fat Shack has the discretion to use this fund for various marketing and advertising activities, including media advertising, direct mailings, website development, and other public relations expenditures. Franchisees do not have direct control over how these funds are spent but contribute to a collective effort to promote the Fat Shack brand. Fat Shack will provide an annual unaudited summary report on the operation of the Marketing and Promotion Fund, available to franchisees upon written request, no later than 120 days after the end of each calendar year.