What actions are Moes Southwest Grill customers prohibited from taking regarding the Equipment?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12. LIQUIDATED DAMAGES. If Customer acts in violation of the prohibitions described in Section 3 of this Lease, or is unable or unwilling to return the Equipment to Company in good working order, normal usage wear and tear excepted, at the expiration or termination of the Lease, Customer will pay as liquidated damages the total of (i) the amount of past-due lease payments, discounted accelerated future lease payments, and the value of Company's residual interest in the Equipment, plus (ii) all tax indemnities associated with the Equipment to which Company would have been entitled if Customer had fully performed this Lease, plus (iii) costs, interest, and attorneys' fees incurred by Company due to Customer's violation of Section 3 or its failure to return the Equipment to Company, minus (iv) any proceeds or offset from the release or sale of the Equipment by Company.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
Based on the 2025 Moe's Southwest Grill Franchise Disclosure Document, Section 12 of the lease agreement outlines prohibitions related to the equipment. Specifically, if a customer violates Section 3 of the lease or cannot return the equipment in good working order at the end of the lease, they will be liable for liquidated damages. These damages include past-due lease payments, discounted accelerated future lease payments, the value of the company's residual interest in the equipment, tax indemnities, and any costs incurred by the company due to the customer's violation or failure to return the equipment.
In practical terms, this means that a Moe's Southwest Grill franchisee must adhere to the stipulations in Section 3 of the lease agreement, whatever those may be. They must also ensure that the equipment is properly maintained and returned in good condition, accounting for normal wear and tear, when the lease expires or is terminated. Failure to do so can result in significant financial penalties, covering not only the outstanding lease amounts but also the potential future value and tax implications of the equipment.
This clause protects Moe's Southwest Grill's investment in the equipment and ensures that franchisees take responsibility for its proper use and maintenance. Prospective franchisees should carefully review Section 3 of the lease agreement to fully understand their obligations and the potential financial consequences of non-compliance. Understanding these terms is crucial for managing costs and maintaining a positive relationship with the franchisor.