Can FSI terminate the Fat Shack Marketing and Promotion Fund at any time?

According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack, Inc. (FSI) retains the right to terminate the Marketing and Promotion Fund at any time. This fund is collected from franchisees, up to a maximum of 1½ percent of the franchisee's weekly gross sales, and is intended for regional, national, or international advertising to promote the Fat Shack brand.

This clause gives Fat Shack significant control over the Marketing and Promotion Fund. While the fund is intended to benefit all franchisees by promoting the brand, Fat Shack's ability to terminate it at any time introduces an element of uncertainty. A prospective franchisee should consider that the marketing support they expect to receive through this fund could be discontinued at Fat Shack's discretion.

It is important to note that FSI has no fiduciary obligation to franchisees in connection with the operation of the Marketing and Promotion Fund. This means that Fat Shack is not legally bound to act in the franchisees' best interests when managing the fund. However, Fat Shack will prepare an annual unaudited summary report on the fund's operation and make it available to franchisees upon written request, no later than 120 days after the end of each calendar year. This provides some transparency, but does not change Fat Shack's right to terminate the fund.

Given this information, a prospective franchisee should inquire about the circumstances under which Fat Shack might terminate the Marketing and Promotion Fund, how often it has been used in the past, and what alternative marketing support Fat Shack would provide if the fund were terminated. Understanding these factors will help a franchisee assess the potential risks and benefits associated with the Marketing and Promotion Fund.