Can the Ad Fund be used for public relations activities for Moes Southwest Grill?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
nd. We have sole authority to direct all advertising programs and promotions and uses of the Ad Fund, with sole control over the creative concepts, materials, and media used in the programs, and the placement and allocation of advertising. We reserve the right to use any media, create any programs, and allocate advertising and promotional expenditures to any regions or locales we deem appropriate.
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.
The advertising and promotions that we conduct are intended to maximize general public recognition and patronage of the System generally in the manner that we determine to be most effective. We reserve the right to use any media, create any programs, and allocate advertising and promotional expenditures to any regions or locales we deem appropriate. We will not spend the Ad Fund in a manner that (i) exclusively benefits our licensees that manufacture and sell Approved Products, if any, or (ii) is principally a solicitation for the sale of franchises.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 53–68)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, the Ad Fund can be used for public relations activities. Moe's Southwest Grill may use the Ad Fund to cover the costs of administering, preparing, and conducting national, local, or regional advertising, promotional, or brand-building programs. These programs can include the cost of preparing and conducting television, radio, magazine, newspaper, and digital advertising campaigns and other public relations activities, including brand reputation management. They may also employ public relations firms and advertising agencies to assist in these activities.
For a prospective franchisee, this means that a portion of the 3% of Net Sales contributed to the Ad Fund could be used for public relations efforts to enhance the brand's image. The FDD also specifies that Moe's Southwest Grill can increase the Advertising Contribution up to 4% of Net Sales with notice to franchisees. The franchisee should be aware that Moe's Southwest Grill has sole authority over the Ad Fund and is not obligated to spend the Ad Fund in a way that directly benefits each franchisee proportionately.
During Fiscal Year 2024, 20% of the Ad Fund was spent on production and agency fees, including promotions, press relations, agency retainer fees and creative services, market research fees, and digital team costs. This demonstrates that a significant portion of the Ad Fund has been allocated to activities closely related to public relations and marketing efforts. While Moe's Southwest Grill does not have an advertising council composed of franchisees that is involved in decision making on advertising issues, they do have a marketing subcommittee of their Franchise Advisory Council that provides suggestions on advertising issues.