Can the Ad Fund be used for franchisee incentive programs 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 franchisee incentive programs. Specifically, the Ad Fund may cover the costs of administering, preparing, and conducting national, local, or regional advertising, promotional, or brand-building programs. These programs can include franchisee incentive programs.
Moes Southwest Grill has sole authority over the Ad Fund, including directing advertising programs and promotions. They control the creative concepts, materials, and media used, as well as the placement and allocation of advertising. This means that while franchisee incentive programs are an allowable use of the Ad Fund, Moes Southwest Grill ultimately decides whether or not to implement them.
For a prospective franchisee, this indicates that Moes Southwest Grill has the flexibility to use advertising funds for incentives aimed at improving franchisee performance or participation. However, franchisees should not assume that such programs will always be in place or that they will directly benefit from them, as the franchisor has the final say in how the Ad Fund is used. Franchisees are required to contribute to the Ad Fund, currently at 3% of Net Sales, and this can be increased to 4% with notice.