Is Moes Southwest Grill required to maintain the Ad Fund in a separate account?
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 is not required to maintain the Ad Fund in a separate account. The Ad Fund is supported by franchisee contributions, which are currently 3% of Net Sales, but may increase to 4%. These contributions are used for advertising and promoting Moes Southwest Grill restaurants, proprietary marks, and the overall system.
Moes Southwest Grill or an affiliate administers the Ad Fund and has sole authority over advertising programs, creative materials, and media placement. The FDD specifies that franchisee contributions are not required to be kept in a separate account from the company's other funds. This arrangement gives Moes Southwest Grill greater flexibility in managing the Ad Fund but may raise concerns for franchisees about transparency and how their contributions are being used.
For the fiscal year 2024, the Ad Fund expenditures were allocated as follows: 57% on media placement, 20% on production and agency fees, 4% on guest response programs and menu innovation, 18% on brand and category marketing expenses, and 1% on administrative expenses. While Moes Southwest Grill is not required to have an independent audit of the Ad Fund, they will provide an annual summary of expenditures upon reasonable request. Any remaining funds at the end of the fiscal year will carry over to the next year. Franchisees should be aware that Moes Southwest Grill can be reimbursed from the Ad Fund for any advanced amounts they or their affiliates contribute beyond the required advertising contributions.