It takes place quite early on in the movie with Dale, having undergone "CGI Surgery" (urgh), setting up a convention stall alongside some other 'washed-up' cartoon celebrities, hoping to once again step into the limelight.
One of these celebrities is, of course, Ugly Sonic, who optimistically states that the crowd will "like me for who I am", before signing an autograph for a couple of chuckling teenagers. Ugly Sonic notices that the fans laugh at him, exclaiming "oh, they're laughing at me, I know that. You can't hurt my feelings if I'm in on the joke!" He then tells Dale that he's lining up to star in a new show in which he takes part in ride-alongs with the FBI, titled "Ugly Sonic, Uglier Crimes". Dale then proceeds to stare at Ugly Sonic's 'human' teeth, the camera panning uncomfortably close to his mouth. And that's about it!