Is Fat Shack required to pass on the cost of advertising and promotional materials to the franchisee?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
b. Access to advertising and promotional materials as may be developed by FSI, the cost of which may be passed on to Franchisee, at FSI's option.
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.
FSI may in its sole discretion, conduct regional, national or international advertising to promote the FAT SHACK brand and system generally, and charge its franchisees for this service.
FSI currently does not require its franchisees to conduct any specific local advertising of their FAT SHACK Restaurants, although FSI recommends that that they do advertise their Restaurant businesses. Although FSI currently does not require Franchisee to expend a specific amount or percentage of its Gross Sales on advertising, it reserve the right to do so in the future.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack has the option to pass on the cost of advertising and promotional materials to its franchisees. Specifically, Fat Shack may develop advertising and promotional materials and then charge the franchisee for access to these materials.
Franchisees are generally responsible for the costs associated with participation in promotional campaigns, prize contests, special offers, gift card programs, and discount programs. This includes honoring coupons, gift certificates, gift cards, and other authorized promotional offers at the franchisee's sole cost, unless Fat Shack specifies otherwise in writing. Fat Shack may also create a mobile device application for the Fat Shack system that incorporates promotional programs and offers, which franchisees must participate in and honor at their own expense.
Fat Shack also has the option to institute a Marketing and Promotion Fee, up to a maximum of 1½ percent of the franchisee's weekly Gross Sales, to be used for advertising and promotional activities. While Fat Shack does not currently require franchisees to conduct specific local advertising, it reserves the right to do so in the future. If local advertising is required, franchisees will need to submit regular reports to Fat Shack accounting for the use of these funds.