For Moes Southwest Grill franchisees, can contributions to an Advertising Cooperative be counted towards the Local Marketing Obligation?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ii) Compliance with the Local Marketing Obligation. Any contributions that you make to an Advertising Cooperative (if one exists) may be counted towards your Local Marketing Obligation. The following expenditures or costs will not count towards your Local Marketing Obligation: salaries, donations, press parties, in-store fixtures or equipment, menus, serving guides and nutritional facts, yellow page advertising, exterior or interior signage, and incentive programs, including costs of honoring coupons and food costs incurred in honoring sales promotions. We have the right to require you to provide documentation that demonstrates your compliance with the Local Marketing Obligation. If you fail to make advertising expenditures in accordance with this Section, we will have the right to spend an amount not to exceed your Local Marketing Obligation on local advertising for you, and you must reimburse us for these expenses. Your failure to comply with this Section10.1.E. is a material breach of 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, contributions to an Advertising Cooperative can be counted toward a franchisee's Local Marketing Obligation. Specifically, any contributions that a franchisee makes to an Advertising Cooperative, if one exists, may be counted towards their Local Marketing Obligation. This means that if Moe's Southwest Grill requires franchisees to participate in a local advertising cooperative, the money they spend on that cooperative can be used to satisfy their requirement to spend a certain amount on local marketing.
However, the FDD also specifies certain expenditures that will not count toward the Local Marketing Obligation. These include salaries, donations, press parties, in-store fixtures or equipment, menus, serving guides and nutritional facts, yellow page advertising, exterior or interior signage, and incentive programs, including costs of honoring coupons and food costs incurred in honoring sales promotions. Therefore, franchisees need to be aware of what qualifies as a valid local marketing expense.
Moe's Southwest Grill retains the right to request documentation from franchisees to demonstrate compliance with the Local Marketing Obligation. If a franchisee fails to meet their Local Marketing Obligation, Moe's Southwest Grill has the right to spend an amount not exceeding the franchisee's Local Marketing Obligation on local advertising and require the franchisee to reimburse them for these expenses. Failure to comply with the Local Marketing Obligation is considered a material breach of the Franchise Agreement.