What is the Fat Shack franchisee's responsibility regarding the promotion of the business?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that it is solely responsible for the successful operation of its FAT SHACK Restaurant and that the continued successful operation thereof is partially dependent upon Franchisee's compliance with this Agreement and the Operations Manual. In addition to all other obligations contained herein and in the Operations Manual, Franchisee agrees that:
- a. Franchisee shall maintain a clean, safe, and high quality FAT SHACK Restaurant operation and shall promote and operate the business in accordance with the Operations Manual and in such a manner as not to detract from or adversely reflect upon the name and reputation of FSI and the goodwill associated with the FAT SHACK name and Marks.
- Except as prohibited or limited by law, Franchisee shall fully participate in all promotional campaigns, prize contests, special offers, gift card programs, discount programs including deal-of-the-day and crowdsourcing programs, and other programs, whether international, national, regional, or local in nature (including the introduction of new products or services or other marketing programs directed or approved by FSI), which are prescribed from time to time by FSI.
Franchisee shall be responsible for the costs of such participation.
In order to participate in FSI's gift card program, Franchisee will be required to utilize the gift card sales and reporting services of a supplier designated by FSI and pay all fees and costs related to those services, which are subject to change by FSI or the supplier periodically.
In addition, Franchisee shall honor any coupons, gift certificates, gift cards, discounts, or other authorized promotional offers of FSI at Franchisee's sole cost unless otherwise specified in writing by FSI.
Franchisee acknowledges that FSI frequently implements such promotions intended to increase customer awareness and build business on an international, national, regional, or local level, and Franchisee's participation in these promotions is essential to their success.
Franchisee acknowledges that FSI has no obligation to reimburse Franchisee for the costs associated with participating in these promotions.
In FSI's discretion, it may create and make available to the public a mobile device application for the FAT SHACK system, which may incorporate these type of promotional programs and offers, which Franchisee must participate in and honor at its sole cost.
FSI may impose additional conditions and requirements related to the application when operational.
From time to time a promotion may not benefit all franchisees in the FAT SHACK system; and if the promotion is not offered in the region, or another unknown hardship arises, FSI may, at FSI's option, exempt Franchisee and/or other franchisees on a case-by-case basis. Franchisee shall obtain FSI's prior written approval of all written advertising or other marketing or promotional programs not previously approved by FSI regarding the FAT SHACK Restaurant,
including, without limitation, "Yellow Pages" advertising, newspaper ads, flyers, brochures, coupons, direct mail pieces, specialty and novelty items, radio and television advertising, Internet "web" pages and other home pages or domain names on any common carrier electronic delivery system. Franchisee acknowledges that web pages and websites on the Internet constitute advertising and is subject to the terms set forth in Section 13.5 below. Any proposed written advertising or a description of a marketing or promotional program not previously approved by FSI shall be submitted to FSI at least 10 days prior to publication, broadcast or use. Franchisee acknowledges that advertising and promoting the FAT SHACK Restaurant in accordance with FSI's standards and specifications is an essential aspect of the Licensed Methods, and Franchisee agrees to comply with all advertising standards and specifications. Franchisee also agrees to participate in any promotional campaigns and advertising and other programs that FSI periodically establishes.
Franchisee agrees to conduct a grand opening advertising and promotional program for the FAT SHACK Restaurant at the time and in the manner specified by FSI. Franchisee's grand opening program will utilize the marketing and public relations programs and media and advertising materials that FSI has either developed or approved. Franchisee agrees that FSI may order and pay for some or all of the grand opening materials on behalf of Franchisee. If FSI does pay for Franchisee's grand opening expenses, FSI shall have the right to debit Franchisee's bank account or otherwise require Franchisee to reimburse FSI for such expenses not later than 60 days prior to the planned FAT SHACK Restaurant opening date. Franchisee will provide FSI with a summary of grand opening program expenditures within 120 days after the FAT SHACK Restaurant opens. 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 the 2025 Fat Shack Franchise Disclosure Document, franchisees are responsible for the successful operation of their Fat Shack restaurant, which includes promoting and operating the business in a way that upholds the brand's reputation. Franchisees must comply with the operations manual and avoid actions that could negatively impact the Fat Shack name and associated goodwill. They are also expected to maintain a clean, safe, and high-quality restaurant environment.
Fat Shack franchisees are required to participate fully in all promotional campaigns, prize contests, special offers, gift card programs, and discount programs, including deal-of-the-day and crowdsourcing initiatives, as directed or approved by Fat Shack. The franchisee bears the costs of participating in these programs. Franchisees must also honor any coupons, gift certificates, gift cards, discounts, or other authorized promotional offers at their own expense, unless Fat Shack specifies otherwise in writing. Fat Shack may create a mobile device application incorporating promotional programs, which franchisees must participate in and honor at their sole cost.
Fat Shack retains control over electronic advertising, and franchisees need prior written consent to develop or use any internet advertising, websites, or social media. Fat Shack can require franchisees to create or customize websites and marketing materials. Franchisees must also obtain Fat Shack's approval for any written advertising or marketing programs not previously approved, such as "Yellow Pages" ads, newspaper ads, flyers, and radio and television advertising. Franchisees must conduct a grand opening advertising and promotional program as specified by Fat Shack, utilizing approved marketing materials.
Fat Shack may conduct regional, national, or international advertising to promote the brand and can charge franchisees a Marketing and Promotion Fee, up to a maximum of 1½ percent of the franchisee's weekly Gross Sales, with 30 days' notice. This fee is payable weekly and is deposited into a Marketing and Promotion Fund administered by Fat Shack. While Fat Shack offers ongoing support and access to advertising and promotional materials, franchisees are primarily responsible for the costs and execution of local marketing efforts, ensuring alignment with Fat Shack's standards and specifications.