What is the condition under which transfer fees are collectable by Moes Southwest Grill?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
For any Transfer that does not result in a Control Transfer, you must give us advance notice and submit a copy of all proposed contracts and other information concerning the Transfer and transferee that we may request.
We will have a reasonable time (not less than 30 days) after we have received all requested information to evaluate the proposed Transfer.
You and/or your transferee must satisfy, in addition to others that we may specify, the conditions in Sections 16.3.B. (pay all sums owed), 16.3.C. (not in default), 16.3.E. (transferee meets qualifications), 16.3.H. (sign assignment and guaranty), 16.3.I. (sign general release), and 16.3.L. (remain liable for pre-Transfer obligations).
You must pay us a transfer fee equal to 10% of the then-current initial franchise fee.
You and your Owners must sign the form of agreement and related documents that we then specify to reflect your new ownership structure.
We may withhold our consent on any reasonable grounds or give our consent subject to reasonable conditions.
- 16.5 Related Party Transfers.
Notwithstanding anything to the contrary in Section 16.3 (Control Transfer) or 16.4 (Non-Control Transfers), you may Transfer cumulatively (i) up to a 49% (100% on your death or disability) interest in this Agreement, the Franchised Business, or your Entity to your spouse, your parent, or your child or (ii) up to a 100% interest in this Agreement, the Franchised Business, or your Entity to any of the original guarantors to this Agreement, provided you (a) give us prior written notice of the Transfer; (b) you and/or your transferee comply with the conditions in Section 16.3.C. (not in default), 16.3.E. (transferee meets qualifications), 16.3.H. (sign assignment and guaranty), 16.3.I. (sign general release), and 16.3.L. (remain liable for pre-Transfer obligations); (c) you pay us a transfer fee equal to 10% of the then-current initial franchise fee; and (d) if the Transfer is of a Controlling Interest, the transferee and any other personnel we designate satisfactorily complete before the date of Transfer our Management Training Program.
- 16.6 Transfer Upon Death or Incapacity.
If you or any Owner dies, becomes incapacitated, or enters bankruptcy proceedings, that person's executor, administrator, personal representative, or trustee must apply to us in writing within three months after the event (death, declaration of incapacity, or filing of a bankruptcy petition) for consent to Transfer the person's interest.
The Transfer will be subject to the provisions of this Section 16, as applicable, except there shall be no transfer fee due.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to the 2025 Moe's Southwest Grill Franchise Disclosure Document, a transfer fee is required for both control and non-control transfers, with the fee being 10% of the then-current initial franchise fee. A non-control transfer refers to any transfer that does not result in a change of control of the franchise. Before a non-control transfer can occur, the franchisee must provide advance notice to Moe's Southwest Grill and submit all proposed contracts and information about the transfer and the transferee as requested by the company. The franchisee and/or the transferee must also meet specific conditions, including paying all outstanding sums, not being in default, ensuring the transferee meets qualifications, signing an assignment and guaranty, signing a general release, and remaining liable for pre-transfer obligations.
For a control transfer, which involves a change in the controlling interest of the franchise, similar conditions apply. The franchisee must ensure compliance with specific conditions, such as not being in default, the transferee meeting qualifications, signing an assignment and guaranty, and signing a general release. Additionally, the franchisee must remain liable for pre-transfer obligations. If the transfer involves a controlling interest, the transferee and any designated personnel must satisfactorily complete Moe's Southwest Grill's Management Training Program before the transfer date.
However, there is an exception to the transfer fee requirement in the event of death, incapacity, or bankruptcy. If a franchisee or owner dies, becomes incapacitated, or enters bankruptcy proceedings, their executor, administrator, personal representative, or trustee must apply in writing for consent to transfer the person's interest within three months of the event. In these cases, the transfer will be subject to the provisions outlined in Section 16 of the franchise agreement, but no transfer fee will be due. This provides some relief to the franchisee's family or estate during difficult times.