If Moes Southwest Grill does not maintain the Ad Fund in a separate account, what does it do with the money?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
We currently do not, and are not required to, maintain the Ad Fund, Advertising Contribution you paid, or income earned from contributions to the Ad Fund in a separate account from our other money. Our Restaurants will contribute to the Ad Fund in the same manner and in the same amounts as similarly-situated franchised Restaurants. Our other franchisees may not be required to contribute to the Ad Fund, may be required to contribute to the Ad Fund at a different rate than you, or may be required to contribute to a different advertising fund.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 53–68)
What This Means (2025 FDD)
According to the 2025 FDD, Moes Southwest Grill does not maintain the Ad Fund in a separate account. Instead, the advertising contributions from franchisees are combined with the company's other money. This means that the funds are not segregated and are used within the general financial operations of Moes Southwest Grill.
This practice has implications for franchisees because it means the Ad Fund is not independently audited, although Moes Southwest Grill will provide an annual summary of expenditures upon request. The lack of a separate account and independent audit might raise concerns about transparency and how the funds are being managed and allocated. While 57% of the Ad Fund was spent on media placement during Fiscal Year 2024, franchisees have limited direct oversight or control over these expenditures.
Moes Southwest Grill details that any unspent Ad Fund monies at the end of a fiscal year will carry over into the next fiscal year. Furthermore, if Moes Southwest Grill or its affiliates contribute amounts exceeding the required advertising contributions or spend more on advertising than available in the Ad Fund, these are considered advances to the Ad Fund, which Moes Southwest Grill has the right to be reimbursed for. The company intends for the Ad Fund to be perpetual but may terminate it after all contributions have been spent for the described purposes.