Does Fat Shack have the right to receive payments from suppliers based on their dealings with Fat Shack franchisees?

According to Fat Shack's 2025 Franchise Disclosure Document, Fat Shack does have the right to receive payments, rebates, commissions, incentives, or other benefits from suppliers based on their dealings with franchisees. The document states that Fat Shack may negotiate purchase arrangements with suppliers for the benefit of franchisees and has the right to receive benefits from suppliers due to franchisee dealings.

For example, during the fiscal year ended December 31, 2024, Fat Shack received $0.22 per case as a result of franchisee purchases from one supplier. Looking ahead, Fat Shack has the discretion to either retain credits or amounts from suppliers stemming from volume discounts, rebates, commissions, incentives, or other benefits related to franchisee purchases. Alternatively, Fat Shack may contribute these funds to the Marketing and Promotion Fund or pass the credits on to franchisees, as they determine.

This arrangement is fairly common in franchising, where franchisors leverage the collective buying power of their franchisees to negotiate better deals with suppliers. These arrangements can benefit the franchisor through direct payments, and potentially benefit franchisees through lower costs or contributions to marketing funds. However, it's important for a prospective franchisee to understand how these arrangements work and how the benefits are distributed within the Fat Shack system.