Does FSI have an obligation to reimburse Fat Shack franchisees for the costs of participating in promotions?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, Fat Shack franchisees are responsible for the costs associated with participating in promotional campaigns. FSI, or Fat Shack International, has no obligation to reimburse franchisees for these costs.
This means that franchisees must cover expenses related to promotions such as prize contests, special offers, gift card programs, and discount programs. Franchisees are also expected to honor coupons, gift certificates, gift cards, and other authorized promotional offers at their own expense, unless FSI specifies otherwise in writing.
Fat Shack emphasizes that franchisee participation in these promotions is essential for their success, as they aim to increase customer awareness and build business on various levels (international, national, regional, or local). While participation is mandatory, franchisees bear the financial burden, which is a common practice in many franchise systems where local marketing and promotional costs are typically the responsibility of the franchisee.