Is Moes Southwest Grill obligated to compensate a franchisee for Innovations created by the franchisee or their employees?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.7 Innovations. All ideas, concepts, techniques, or materials relating to a Business or the System or derivations or modifications of the Intellectual Property or any other element of the System (collectively, "Innovations"), whether or not protectable intellectual property and whether created by or for you or your Owners, employees, or contractors, must be promptly disclosed to us and will be deemed to be our sole and exclusive property, part of the System and the Intellectual Property, and works made-for-hire for us. To the extent any Innovation does not qualify as a work made-for-hire for us, by this Section you assign ownership of that Innovation, and all related rights to that Innovation, to us and agree to sign (and to cause your Owners, employees, and contractors to sign) whatever assignment or other documents we request to evidence our ownership or to help us obtain intellectual property rights in the Innovation. We and our affiliates have no obligation to make any payments to you or any other person with respect to any Innovations. You may not use any Innovation in operating the Franchised Business or otherwise without our prior approval.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to the 2025 Moe's Southwest Grill Franchise Disclosure Document, Moe's Southwest Grill is not obligated to compensate a franchisee for any innovations created by them or their employees related to the business. The franchise agreement states that all ideas, concepts, techniques, or materials related to the business, the System, or the Intellectual Property, whether or not they are protectable, become the sole and exclusive property of Moe's Southwest Grill. This includes innovations created by the franchisee, their owners, employees, or contractors.
The agreement explicitly states that Moe's Southwest Grill and its affiliates have no obligation to make any payments to the franchisee or any other person with respect to any innovations. The franchisee is required to promptly disclose any such innovations to Moe's Southwest Grill and to sign any documents necessary to transfer ownership of the innovation to the company.
This clause in the franchise agreement means that if a franchisee develops a new method, process, or product related to the Moe's Southwest Grill system, the franchisee must disclose it to the franchisor, and Moe's Southwest Grill will own it without any obligation to compensate the franchisee. The franchisee cannot use the innovation without prior approval from Moe's Southwest Grill. This is a significant consideration for prospective franchisees who may have innovative ideas to improve the business.