> I'd assume this is mostly just about brand control. A store selling their products that they don't control will not necessarily have the experience they want for their brand. Even if they can't shut it down, just harassing them can prevent the store from growing very large and causing issues with their brand perception.

Can't they distance themselves from him and at the same time benefit from selling through him? They'd even have more influence over him if they had a cooperative agreement: ie: don't call himself "Pirate Joe's" and put up a big disclaimer. He wouldn't have to do that, but maybe he would do those things if they gave him a side channel to get goods.