Does the Moes Southwest Grill franchise agreement require owners to sign personal covenants?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
elow), (ii) use the Marks or the System at any location other than the Accepted Location, except as otherwise provided in Section 4.3 (Catering Services and Delivery Services) or as otherwise approved in writing, or (iii) to use the Marks or the System in any wholesale, e-commerce, or other channel of distribution besides the operation of the Franchised Business at the Accepted Location.
- 1.3 Acceptance of License. You hereby accept the license granted in Section 1.1 (Grant of Franchise) and agree to operate the Franchised Business according to the provisions of this Agreement for the entire Term, as defined in Section 2.2 (Renewal Term).
1.4 Ownership and Guaranty.
- A. Owners of Equity. If you are a corporation, limited liability company, partnership, or other entity (collectively, an "Entity"), all of your owners of a legal and/or beneficial interest in the Entity, as such owners may be added or removed from time to time in accordance with Section 16 (Transfer) (the "Owners") must execute the "Personal Covenants" that is attached in Schedule B (the "Personal Covenants") and the "Guaranty of Payment and Performance" that is attached in
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, if the franchisee is an entity such as a corporation, limited liability company, or partnership, all owners of a legal or beneficial interest in the entity must execute a document called "Personal Covenants," which is attached as Schedule B to the franchise agreement. By signing these personal covenants, each owner agrees to be bound by the provisions contained within the franchise agreement. This includes adherence to the restrictions outlined in Section 15, which pertains to confidential information and restrictive covenants.
This requirement ensures that all individuals with an ownership stake in the Moe's Southwest Grill franchise are personally responsible for upholding the terms of the franchise agreement. It means that Moe's Franchisor SPV LLC can pursue action against individual owners, not just the business entity, if there is a breach of contract. This is a common practice in franchising to prevent owners from shielding themselves behind a corporate structure.
The personal covenants also serve as an acknowledgement that the owners have read and understood their obligations under the Franchise Agreement and that they are gaining a direct personal benefit from the agreement. This acknowledgement reinforces the enforceability of the covenants and demonstrates that the owners are aware of their responsibilities and the potential consequences of non-compliance.
Furthermore, any violation of the franchise agreement by an owner will be considered a violation by the franchisee itself. This provision underscores the importance of ensuring that all owners are fully aware of and compliant with the terms of the franchise agreement, as their actions can directly impact the franchise's standing with Moe's Southwest Grill.