Can Moes Southwest Grill require franchisees to purchase Goods from a single designated source?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
se items. The availability and terms of financing will depend on factors like the availability of financing generally, your credit worthiness, collateral you pledge, policies of your lending institution, and economic conditions in your area.
ITEM 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Required Purchases. We have the right to require that Approved Products, other products, Proprietary Ingredients, supplies (including chemicals), furniture, fixtures, equipment, and services (collectively, "Goods") that you purchase for resale or purchase or lease for use in your Restaurant: (i) meet specifications that we establish from time to time; (ii) be a specific brand, kind, or model; (iii) be purchased or leased only from Approved Suppliers; (iv) be purchased or leased only from a single source that we designate (which may include us or our affiliates or a buying cooperative organized by us or our affiliates); and/or (v) be purchased as part of a purchasing program, arrangement, or contract that we negotiate or specify. We may add or change Approved Suppliers at any time.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 47–51)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, Moe's Southwest Grill retains the right to mandate that franchisees procure specific goods from a single designated source. These goods encompass a wide range of items, including approved products, other products, proprietary ingredients, supplies (including chemicals), furniture, fixtures, equipment, and services, all of which are essential for the operation of the restaurant. This designated source may include Moe's Southwest Grill itself, its affiliates, or a buying cooperative organized by them.
This requirement ensures that Moe's Southwest Grill maintains consistency and quality across all franchise locations. By controlling the supply chain, Moe's Southwest Grill can enforce standards and specifications for the goods used in the restaurants. This can help protect the brand's reputation and ensure that customers receive a consistent experience at any Moe's Southwest Grill location.
For a prospective franchisee, this means limited autonomy in sourcing products and services. While this may reduce the franchisee's ability to negotiate prices or choose preferred vendors, it also streamlines operations and ensures compliance with Moe's Southwest Grill's standards. It is important for potential franchisees to carefully evaluate the list of required goods and approved suppliers to understand the potential costs and limitations associated with this requirement.
Furthermore, Moe's Southwest Grill estimates that purchases from Approved Suppliers will constitute approximately 85% of the total purchases and leases needed to establish a restaurant and about 90% of the total purchases and leases needed to operate a restaurant. This high percentage underscores the significant impact of these restrictions on a franchisee's purchasing decisions and overall operational costs.