What conditions, at a minimum, must be satisfied for a proposed Control Transfer of a Moes Southwest Grill franchise?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
For a proposed Control Transfer, in addition to any other conditions that we may specify and without limiting in any way our sole and absolute discretion to grant or withhold consent for a proposed Control Transfer, at a minimum, the following conditions must be satisfied (unless waived by us):
- A.
You notify us in writing at least 90 days prior to any proposed Control Transfer and provide all requested information at least 60 days prior to any proposed Control Transfer.
- B.
All sums you owe us and our affiliates are paid.
- C.
You are not (i) at the time of the Transfer request or the Transfer closing, in default in any material respect under this Agreement or any other agreement with us, or any of our affiliates, or any of our Approved Suppliers and (ii) you have not been during the Term, in default in any material respect under this Agreement or any other agreement with us, any of our affiliates, or any of our Approved Suppliers without curing such default within the applicable cure period.
- D.
The transferee and its proposed directors, officers, shareholders, partners, and members, as applicable, and its Manager and any other personnel we designate, who will be responsible for operating and managing the Business, satisfactorily complete before the date of Transfer our Management Training Program.
- E.
The transferee and its directors, officers, shareholders, partners, members, and managers, as applicable, meet our requirements for approval as new franchisees, including our requirements for proficiency in the English language.
If the transferee, its affiliates, or any of its directors, officers, shareholders, partners, members, or managers owns an interest in another Business or another franchise licensed by one of our affiliates, those individuals or Entities must (i) at the time of the Transfer request or the Transfer closing, not be in default in any material respect under any agreement with us, any of our affiliates, or any suppliers, (ii) during the previous two years, not have been in default in any material respect under any agreement with us, our affiliates, or any suppliers without curing such default within the applicable cure period, and (iii) in our sole judgment, have been approved to develop and operate additional franchises.
- F.
Notwithstanding when the Franchised Business was last remodeled, the transferee agrees in writing that it will, at its expense, upgrade, and remodel the Franchised Business to conform to our then-current Standards for quality and appearance and trade dress within the time we reasonably specify; provided, however, if the Franchised Business conforms to our then-current Standards for appearance, the transferee will only address all items identified in the last quality assurance inspection, within the time we reasonably state.
- G.
The transferee signs our then-current form of franchise agreement and all other then-current related agreements as we require of new franchisees generally provided, however, the transferee will not be required to pay the initial franchise fee stated in the new franchise agreement and the term of the new franchise agreement will expire on the expiration date of the Term of this Agreement.
The terms of our then-current franchise agreement, including the fees, may be materially different than the terms of this Agreement.
- H.
The transferee (and, if the transferee is not an individual, such owners of a legal or beneficial interest in the transferee as we may request) must (i) enter into a written assignment, in a form satisfactory to us, assuming and agreeing to discharge and guarantee all of your obligations under this Agreement and (ii) must execute our then-current form of personal guarantee.
- I.
You, all Owners and guarantors, the transferee, and all individual owners of the transferee, deliver to us a written and duly signed general release, in a form that we will prepare at our sole expense, of all claims against the Released Parties, which indemnifies the Released Parties against any statements, representations, or warranties that you may have made or given to the proposed transferee.
- J.
We receive a fully-signed copy of all Transfer documents.
- K.
You pay us a transfer fee equal to 50% of the amount of the then-current initial franchise fee.
- L.
You and your Owners must agree to remain liable for all of the obligations to us in connection with the Franchised Business arising before the effective date of the Transfer and execute any and all instruments that we reasonably request to evidence such liability.
- M.
You must provide us with written notice from your landlord indicating that your landlord has agreed to transfer the Site Agreement to your transferee.
If, as a condition of the Transfer, the lease is renewed or extended for one year or more, the then-current lease renewal fee (if any) will be assessed against the transferee.
- N.
We must determine, in our sole discretion, that the purchase price and payment terms will not adversely affect the operation of the Franchised Business, and if you or your Owners finance any part of the purchase price, you and they must agree that all obligations under promissory notes, agreements, or security interests reserved in the Franchised Business are subordinate to the transferee's obligation to pay all amounts due to us and our affiliates and otherwise to comply with this Agreement.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, a Control Transfer involves transferring controlling interest in the franchise. The franchisor has sole discretion to grant or withhold consent for a proposed Control Transfer. However, at a minimum, certain conditions must be satisfied, unless Moe's Southwest Grill waives them. These conditions ensure that the transfer does not negatively impact the franchise system and that the new owner is qualified.
First, the franchisee must notify Moe's Southwest Grill in writing at least 90 days before the proposed transfer and provide all requested information at least 60 days prior. All outstanding payments owed to Moe's Southwest Grill and its affiliates must be settled. The franchisee must not be in material default of any agreements with Moe's Southwest Grill, its affiliates, or approved suppliers at the time of the transfer or have a history of uncured defaults. The proposed transferee and their management team must satisfactorily complete Moe's Southwest Grill's Management Training Program before the transfer date.
Furthermore, the transferee and its personnel must meet Moe's Southwest Grill's requirements for new franchisees, including English language proficiency. If the transferee or its affiliates have interests in other businesses or franchises licensed by Moe's Southwest Grill's affiliates, they must not be in material default under any agreements and must have a satisfactory record of operating additional franchises. The franchisee and their owners must sign the required agreements to reflect the new ownership structure. The transferee must also agree in writing to upgrade and remodel the Franchised Business to meet the then-current standards, sign the current form of franchise agreement, and enter into a written assignment assuming all obligations under the existing agreement.
Finally, all parties involved, including the franchisee, owners, guarantors, transferee, and individual owners of the transferee, must deliver a general release of all claims against Moe's Southwest Grill. Moe's Southwest Grill must receive fully signed copies of all transfer documents. The franchisee must pay a transfer fee equal to 50% of the then-current initial franchise fee. The franchisee and owners must agree to remain liable for pre-transfer obligations and provide written notice from the landlord agreeing to transfer the site agreement to the transferee. Moe's Southwest Grill must also determine that the purchase price and payment terms will not adversely affect the franchise operation.