Can the Ad Fund be used for developing internet sites for Moes Southwest Grill?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
We may use the Ad Fund to meet the costs of administering, preparing, and conducting national, local, or regional advertising, promotional, or brand building programs of any kind, including the cost of (i) preparing and conducting television, radio, magazine, newspaper, and digital advertising campaigns and other public relations activities (including, but not limited to, for purposes of brand reputation management), (ii) employing public relations firms and advertising agencies to assist in these activities, and (iii) conducting other activities that are directly or indirectly designed to promote the System, its franchisees, and/or increase System sales, such as limited-time menu offerings, crew incentives, franchisee incentive and/or promotional programs, customized materials (e.g., cups), up-sell programs, guest response programs, manager/employee recognition programs, quality assurance and food safety programs, mystery shop and shopper programs, brand websites and ordering platforms, brand applications, social media account administration and promotion, and in-store equipment and technologies related to such marketing programs. We may use the Ad Fund to compensate us for the reasonable administrative costs and overhead we incur in activities related to advertising and promotional programs, including new product development; market research; preparing advertising and promotional materials; Digital Marketing (as defined below); working with public relations firms, advertising agencies, advertising placement services, and creative talent; reimbursing franchisee advisory council meeting expenses; developing and maintaining, and paying third parties for the development and maintenance of, internet sites, applications, and other equipment and technologies related to marketing programs.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 53–68)
What This Means (2025 FDD)
According to Moes Southwest Grill's 2025 Franchise Disclosure Document, the Ad Fund can be used for developing internet sites. Specifically, the Ad Fund may cover the costs of developing and maintaining internet sites related to marketing programs. This includes compensating Moes Southwest Grill for the administrative costs and overhead incurred in these activities and paying third parties for the development and maintenance of these sites.
This means that a portion of the 3% of net sales that franchisees contribute to the Ad Fund (which may increase to 4%) could be allocated to creating and managing Moes Southwest Grill's online presence. This benefits franchisees by ensuring the brand maintains a consistent and potentially effective online presence without requiring individual franchisees to shoulder the entire burden or develop their own marketing websites independently, although franchisees are able to conduct digital marketing with franchisor approval.
Moes Southwest Grill has sole authority over the Ad Fund, including how it is spent on advertising programs and promotions. While franchisees can offer suggestions on advertising issues through the marketing subcommittee of the Franchise Advisory Council, these suggestions are not binding. The franchisor also provides an annual summary of Ad Fund expenditures upon request, but is not required to provide full financial statements. This gives Moes Southwest Grill significant control over the brand's marketing strategies and online presence, while franchisees have limited direct input or oversight.