If FSI recommends prices for a Fat Shack restaurant, is the franchisee required to follow them?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Restaurant. If FSI establishes a maximum price for any products or services, Franchisee shall not offer or sell those products or services at any greater price. If FSI establishes a minimum price for any products or services, Franchisee shall not offer or sell those products or services at any lesser price. If FSI does not establish pricing limits, it may establish suggested prices. In that case, any prices that FSI recommends to Franchisee are merely recommendations and Franchisee may establish its own prices, which may be higher or lower than FSI's recommended prices. Franchisee must abide by FSI's advertising policies related to advertising prices.
- t. Franchisee expressly authorizes FSI and its approved suppliers to contact Franchisee by e-mail, telephone, mail, or any other means related to any aspect of the FAT SHACK Restaurant, authorized products and services, this Agreement, or the FSI franchise system, for so long as this Agreement remains in effect.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees are not required to follow suggested prices. If Fat Shack does not establish pricing limits, it may establish suggested prices. In that case, any prices that Fat Shack recommends to a franchisee are merely recommendations and the franchisee may establish its own prices, which may be higher or lower than Fat Shack's recommended prices. However, the franchisee must abide by Fat Shack's advertising policies related to advertising prices.
This means that while Fat Shack may offer pricing guidance, franchisees have the flexibility to set their own prices based on local market conditions, competition, and other factors. This autonomy can be beneficial for franchisees as it allows them to tailor their pricing strategies to maximize profitability in their specific location.
However, franchisees must be careful to adhere to Fat Shack's advertising policies. This likely means that while franchisees can set their own prices, they must accurately represent those prices in their advertising and promotional materials. This is a fairly common practice in franchising, as franchisors want to ensure consistent branding and avoid misleading customers with deceptive advertising.
Additionally, Fat Shack may periodically set a maximum or minimum price that a franchisee may advertise and charge for products and services offered by its Fat Shack Restaurant. If Fat Shack establishes a maximum price for any products or services, a franchisee shall not offer or sell those products or services at any greater price.