Is Moes Southwest Grill obligated to conduct any advertising?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
Our Advertising. We are not obligated to conduct any advertising. We may periodically formulate, develop, produce, and conduct, at our sole discretion, advertising or promotional programs in such form and medium as we determine to be most effective. We may make available to you for you to purchase approved advertising and promotional materials, including signs, posters, collaterals, etc. that we have prepared.
Ad Fund. We will allocate your Advertising Contributions to a fund for the advertising and promotion of the Restaurants, the Proprietary Marks, and the System (the "Ad Fund"). Currently, you must make a monthly Advertising Contribution to the Ad Fund in the amount of 3% of Net Sales. We may, however, increase the Advertising Contribution up to 4% of Net Sales at any time by notice to franchisees. Your Advertising Contribution is in addition to your Local Marketing Obligation and your Grand Opening Obligation.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 53–68)
What This Means (2025 FDD)
According to Moes Southwest Grill's 2025 Franchise Disclosure Document, Moes Southwest Grill is not obligated to conduct any advertising. However, Moes Southwest Grill retains the discretion to periodically formulate, develop, produce, and conduct advertising or promotional programs in any form and medium they deem most effective. They may also offer franchisees the opportunity to purchase approved advertising and promotional materials.
Moes Southwest Grill franchisees are required to make monthly advertising contributions to the Ad Fund, which is currently 3% of Net Sales, but may increase to 4% with notice. These contributions are allocated to advertising and promoting the Restaurants, Proprietary Marks, and the System. This Ad Fund is administered by Moes Southwest Grill or an affiliate, granting them sole authority over advertising programs, creative concepts, and media usage.
In addition to the Ad Fund contribution, franchisees must also fulfill a Local Marketing Obligation, currently set at 1% of Net Sales per calendar quarter. This is separate from the Grand Opening Obligation, which requires a minimum spend of $25,000 (or $35,000 if the Restaurant is the first to open in a Designated Market Area) on advertising during the 90 days before and after opening. Moes Southwest Grill has the right to mandate participation in advertising cooperatives and can also direct how the Local Marketing Obligation is spent.
While Moes Southwest Grill is not obligated to conduct advertising, franchisees are required to contribute to advertising efforts through the Ad Fund and Local Marketing Obligations. This structure gives Moes Southwest Grill significant control over advertising strategies and expenditures, while also placing financial responsibility on the franchisees to support these initiatives.