The shop I used to run the FNM gave out all his cards. I knew another competitor, however, that gave out only half the FNM cards (kept 2 for himself). One of his customers didn't like that and I believe ratted him out to WOTC. That had impact to his bottom line as I believe he couldn't order some product direct anymore.

If they do receive 4 cards/week, he is obligated to give them out as prizes and not keep them. They are for the players. If he wants them he should offer up cash/credit for those not wanting them.

Is he running sanctioned tournaments (results submitted to WOTC)? That is the only way, I believe, he would get support as they have no idea how many players play at the store.

I agree with Junuchi and your store seems to be giving out prizes that they want to give, rather than store credit/packs/mtg related items. No pack support for regular FNM, but for Pre-release and special Celebration events they generally do (you could only hope they would be doing a 20 year local celebration like they did for 10 years)..

Good luck...Greg