Can Fat Shack require a franchisee to make payments to Fat Shack for the benefit of designated suppliers not affiliated with Fat Shack?

According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack may require franchisees to make payments to Fat Shack for the benefit of designated suppliers not affiliated with Fat Shack. This means that Fat Shack has the right to act as an intermediary for payments between franchisees and suppliers that are not directly part of the Fat Shack organization.

This arrangement gives Fat Shack control over the supply chain and potentially allows them to negotiate better deals with suppliers on behalf of franchisees. However, it also means that franchisees are dependent on Fat Shack to manage these payments and ensure that suppliers are paid correctly and on time.

It is also important to note that Fat Shack and its affiliates may receive payments from suppliers based on the suppliers' dealings with franchisees. Fat Shack can use these amounts without restriction and for any purpose they deem appropriate. This creates a potential conflict of interest, as Fat Shack may be incentivized to choose suppliers that provide them with the highest payments, rather than those that offer the best prices or quality for franchisees.