If Fat Shack requires a modification or discontinuance of the marks, who bears the expense?

According to Fat Shack's 2025 Franchise Disclosure Document, if Fat Shack requires a franchisee to modify or discontinue the use of its marks, the franchisee bears the expense. This means that if Fat Shack decides to change its branding or if a legal issue arises that necessitates a change in the marks used by the franchise, the franchisee will be responsible for covering the costs associated with implementing those changes. These costs could include things like new signage, marketing materials, and other related expenses.

This arrangement places a financial risk on the franchisee, as they must be prepared to cover unforeseen expenses related to brand modifications. It is important for prospective franchisees to consider this potential cost when evaluating the overall investment required to operate a Fat Shack franchise. Franchisees should budget for potential rebranding or modification expenses to avoid financial strain if such changes are mandated by Fat Shack.

In the event that Fat Shack initiates or defends litigation to protect the licensed marks and a franchisee's right to use them, Fat Shack may reimburse the franchisee for costs, including attorney's fees and court costs, associated with the litigation. This reimbursement would come from amounts recovered in the litigation, if any, that exceed Fat Shack's costs. However, this is contingent on the franchisee using the marks in compliance with the Franchise Agreement and Fat Shack's counsel determining that intervention is justified. If Fat Shack does not elect to protect the franchisee against claims of infringement or unfair competition, the franchisee may take steps to protect themselves at their own expense.