Can Moes Southwest Grill require franchisees to purchase gift cards for promotional campaigns?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
goods before your Restaurant opens. The initial fees are not refundable.
ITEM 6
OTHER FEES
| | We may, in our sole discretion, | |---|---| | reduce or waive the Grand Opening Obligation if your Restaurant is located in a Captive Audience | | | Location (as defined in Item 12). | |
| Type of Fee1 | Amount | Date Due | Remarks |
|---|---|---|---|
| than 1% of Net Sales on local market advertising. | See Item 11 for what will count towards meeting your obligation. If you fail to make the minimum advertising expenditures, we may do so on your behalf and you must reimburse us for our expenses. We may also elect to collect all or a portion of the Local Marketing Obligation from you and (i) contribute it to the Ad Fund, (ii) conduct national, regional, or local advertising, (iii) spend it on local advertising, or (iv) contribute it to your Advertising Cooperative. | ||
| Promotions and Advertising Materials | Up to 110% of our or our affiliates' actual costs and expenses related to the goods you purchase from us or them. | As incurred | You will participate at your own cost in temporary or permanent promotional campaigns that we establish (e.g., limited time offers, gift cards, coupons, loyalty programs, customer relationship management, and other supplemental marketing programs), which may be applicable to the System as a whole or to specific advertising market areas, and promotional programs your Advertising Cooperative establishes. We may require or permit you to purchase items from us or our affiliates necessary to participate in such campaigns, such as counter cards posters, banners, signs, photographs, loyalty program rewards, give-away items, and gift cards. |
| Insufficient Funds Fee | Up to 110% of our or our affiliates' actual costs and expenses. | On invoice | If we draft money from your account under our electronic funds transfer ("EFT") or draft system, and there are insufficient funds to cover the draft, we may charge this fee, which will include any bank return charges. This fee is in addition to interest on the amount due. |
| Interest | The lesser of 1.5% per month or the maximum legal interest rate. | On invoice | You must pay us or our affiliates interest on any amounts past due to us or our affiliates. |
| Late Reporting Fee | Our then-current fee. Currently, $50 per week. | On invoice | You must pay this late fee if you fail to submit timely, complete and accurate reports, financial statements, tax returns, and statements of initial investment costs when due. We may change this fee in any year by no more than the Allowed Adjustment (as defined in Note 4). |
| Taxes and Other Payments | Our costs and expenses. |
Source: Item 6 — Other Fees (FDD pages 30–41)
What This Means (2025 FDD)
According to Moes Southwest Grill's 2025 Franchise Disclosure Document, franchisees are required to participate in promotional campaigns, which may include the purchase of gift cards. Specifically, Moes Southwest Grill may require franchisees to purchase items necessary to participate in these campaigns from them or their affiliates. These items can include gift cards, among other things. The cost for these "Promotions and Advertising Materials" can be up to 110% of Moes Southwest Grill's or their affiliates' actual costs and expenses.
This means that Moes Southwest Grill franchisees may be obligated to buy gift cards to support promotional activities. The franchisee will bear the cost of participating in both temporary and permanent promotional campaigns that Moes Southwest Grill establishes, as well as promotional programs established by their Advertising Cooperative.
In addition to potentially purchasing gift cards for promotional campaigns, franchisees must also participate in the brand's gift card and loyalty programs. Moes Southwest Grill may charge administrative fees for participation in these programs. Currently, the gift card distributor retains 7.75% or 12% of the value of gift cards purchased from retailers other than a Moes Southwest Grill Restaurant, with the percentage varying by retailer. Franchisees also currently pay $4.50 per Restaurant per month to the designated gift card processor for unlimited transactions and settlement processing. These fees are subject to change, but will not exceed 110% of Moes Southwest Grill's or their affiliates' actual costs and expenses.