From whom must a Moes Southwest Grill franchisee purchase the ingredients for the Freestyle Dispensers?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
2. PRICING AND ORDERING OF INGREDIENTS:
- a. Customer will purchase the ingredients for the Freestyle Dispensers from Company or its authorized distributors, at Company's then-current chain account prices, which are subject to change from time to time.
- b. Company agrees that the over-all pricing for the ingredients available for purchase in the 48 contiguous United States and the District of Columbia in a given calendar year except for HFCS Sweetener will not increase in the next calendar year by more than the pricing at the end of the given year increased by the greater of: (i) 4%; or (ii) a percentage determined for that calendar year by the following calculation based upon changes to the Consumer Price Index for Food Away From Home as published by the Department of Labor ("CPI"). See Note in Exhibit 5-2. Company will calculate the difference between (i) the monthly average of the CPI for the most recent prior October through September period ("CPI Most Recent Average") and (ii) the second most recent October through September period ("CPI Second Most Recent Average"). Company will then calculate what the percentage of this difference is as compared to the CPI Second Most Recent Average. See Example 1 in Exhibit 5-2. The published CPI can be found at: http://www.bls.gov/cpi/tables.htm. If the Department of Labor discontinues publishing the CPI or materially changes the CPI, then Company will establish a different price
ceiling methodology to be determined in its sole discretion.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to the 2025 Moe's Southwest Grill Franchise Disclosure Document, franchisees must purchase the ingredients for the Freestyle Dispensers from either the Company (referring to Moe's Franchisor SPV LLC) or its authorized distributors. The prices for these ingredients will be the then-current chain account prices, which are subject to change.
The agreement also includes a pricing protection clause, stating that the overall pricing for ingredients (excluding HFCS Sweetener) available for purchase in the 48 contiguous United States and the District of Columbia in a given calendar year will not increase in the next calendar year by more than the pricing at the end of the given year increased by the greater of: (i) 4%; or (ii) a percentage determined for that calendar year based upon changes to the Consumer Price Index for Food Away From Home as published by the Department of Labor.
This pricing calculation involves comparing the monthly average of the CPI for the most recent prior October through September period with the second most recent October through September period. The percentage difference between these averages, relative to the second most recent average, determines the allowable price increase. The published CPI can be found at the provided website. This pricing structure aims to provide some predictability in ingredient costs for franchisees, although Moe's Southwest Grill retains the right to modify the price ceiling methodology if the Department of Labor discontinues or materially changes the CPI.