Can the Moes Southwest Grill Ad Fund be used for purposes of brand reputation management?
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 the 2025 Moes Southwest Grill FDD, the Ad Fund can be used for brand reputation management. Moes Southwest Grill may use the Ad Fund to cover the costs of various advertising, promotional, and brand-building programs, including public relations activities specifically for brand reputation management. This includes the costs of conducting television, radio, magazine, newspaper, and digital advertising campaigns. Moes Southwest Grill also uses the Ad Fund to employ public relations firms and advertising agencies to assist in these activities.
In Fiscal Year 2024, Moes Southwest Grill allocated the Ad Fund towards media placement (57%), production and agency fees (20%), guest response programs and menu innovation projects (4%), brand and category marketing expenses (18%), and administrative expenses (1%). While these figures provide a breakdown of how the Ad Fund was spent, the FDD indicates that Moes Southwest Grill has sole authority to direct all advertising programs and promotions and uses of the Ad Fund.
Moes Southwest Grill is not obligated to conduct any advertising, but they may formulate, develop, produce, and conduct advertising or promotional programs at their sole discretion. The advertising and promotions conducted are intended to maximize general public recognition and patronage of the Moes Southwest Grill system. While franchisees contribute to the Ad Fund, Moes Southwest Grill is not obligated to ensure that franchisees benefit directly or proportionately from the placement of advertising or that advertising impacts their specific area.