What is the Ad Fund used for regarding 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. We have no obligation to make expenditures from the Ad Fund that are equivalent or proportionate to your contributions, ensure that you benefit directly or proportionately in any amount from the placement of advertising, or ensure that any advertising impacts or penetrates your area.
Currently, we use one or more national and/or regional advertising agencies, as well as our inhouse marketing department, to develop and produce our marketing materials. During Fiscal Year 2024, 57% of the Ad Fund was spent on media placement (including tv, radio, print, digital, and social media placement); 20% on production and agency fees (including promotions, press relations, agency retainer fees and creative services, market research fees, and digital team costs); 4% on guest response programs and menu innovation projects; 18% on brand and category marketing expenses (including salaries of marketing personnel); and 1% on administrative expenses.
We are not required to have an independent audit of the Ad Fund completed. We will provide you with an annual summary of the expenditures of the Ad Fund on your reasonable request but are not required to prepare financial statements for the Ad Fund. If any monies in the Ad Fund remain at the end of a fiscal year, they will carry-over in the Ad Fund into the next fiscal year.
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 is used for advertising and promoting the restaurants, proprietary marks, and the Moe's Southwest Grill system. Franchisees are required to contribute to this fund, with the current contribution being 3% of Net Sales, although Moe's Southwest Grill can increase this up to 4% with notice. These contributions are separate from the Local Marketing Obligation and Grand Opening Obligation. The Ad Fund is not maintained in a separate account. Other franchisees may contribute at different rates or to different advertising funds. The franchisor or an affiliate administers the Ad Fund and has sole authority over advertising programs, creative content, and media placement.
The funds are used to cover the costs of administering and conducting advertising, promotional, and brand-building programs, including television, radio, magazine, newspaper, and digital advertising campaigns. Moe's Southwest Grill may also use the Ad Fund to employ public relations firms and advertising agencies, and to support activities that promote the system, such as limited-time menu offerings, crew incentives, franchisee incentive programs, customized materials, up-sell programs, guest response programs, manager/employee recognition programs, quality assurance and food safety programs, mystery shopper programs, brand websites and ordering platforms, brand applications, social media account administration, and in-store equipment related to marketing programs. Moe's Southwest Grill can also use the Ad Fund to cover administrative costs and overhead related to advertising and promotional programs, including new product development, market research, and maintaining internet sites and applications.
During Fiscal Year 2024, Moe's Southwest Grill spent 57% of the Ad Fund on media placement, 20% on production and agency fees, 4% on guest response programs and menu innovation projects, 18% on brand and category marketing expenses (including salaries of marketing personnel), and 1% on administrative expenses. While an independent audit of the Ad Fund is not required, Moe's Southwest Grill will provide an annual summary of expenditures upon request. Any unspent funds at the end of the fiscal year will carry over to the next year. Moe's Southwest Grill or its affiliates may advance funds to the Ad Fund and be reimbursed from the Ad Fund.
Moe's Southwest Grill intends for the Ad Fund to be perpetual but may terminate it after all contributions have been spent. Franchisees should note that Moe's Southwest Grill is not obligated to spend Ad Fund monies in proportion to individual contributions or to ensure direct benefits to each franchisee's area. While there isn't an advertising council composed of franchisees, a marketing subcommittee within the Franchise Advisory Council provides suggestions on advertising issues, though this council is advisory only and lacks decision-making authority.