Is the Advertising Contribution for Moes Southwest Grill in addition to the Grand Opening Obligation?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
vertising**
Our Advertising. We are not obligated to conduct any advertising. We may periodically formulate, develop, produce, and conduct, at our sole discretion, advertising or promotional programs in such form and medium as we determine to be most effective. We may make available to you for you to purchase approved advertising and promotional materials, including signs, posters, collaterals, etc. that we have prepared.
Ad Fund. We will allocate your Advertising Contributions to a fund for the advertising and promotion of the Restaurants, the Proprietary Marks, and the System (the "Ad Fund"). Currently, you must make a monthly Advertising Contribution to the Ad Fund in the amount of 3% of Net Sales.
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 Advertising Contribution is indeed in addition to the Grand Opening Obligation. Franchisees must contribute to the Ad Fund, which is used for advertising and promoting the Restaurants, Proprietary Marks, and the System. Currently, this Advertising Contribution is 3% of Net Sales monthly, but Moes Southwest Grill can increase it to 4% with notice.
In addition to the Advertising Contribution, franchisees also have a Local Marketing Obligation, which requires spending at least 1% of Net Sales each calendar quarter on local market advertising. Moes Southwest Grill retains the right to direct how these local marketing funds are spent, potentially requiring franchisees to pay the Local Marketing Obligation to them for various advertising purposes. The Grand Opening Obligation requires franchisees to spend a minimum of $25,000 (or $35,000 if the Restaurant is the first to open in a Designated Market Area) on advertising during the 90 days before and after opening.
These obligations are separate and distinct. The franchisee's Local Marketing Obligation is in addition to both the Grand Opening Obligation and the Advertising Contribution. Similarly, any contributions to an Advertising Cooperative are additional to the Advertising Contribution and the Grand Opening Obligation. This layered approach to advertising expenses means franchisees need to budget for these separate obligations to fulfill their marketing responsibilities effectively.