What are 'unbundling costs' as defined in the Moes Southwest Grill dispensing equipment lease?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Lease is terminated with respect to any piece of Equipment for any reason prior to 100 months from the Commencement Date for that piece of Equipment, Customer will pay Company the actual cost of removal (including standard shipping and handling charges) and remanufacturing of that Equipment, as well as the unamortized portion of the costs of (i) installation and (ii) non-serialized parts (e.g., pumps, racks and regulators) and other ancillary equipment. Collectively, removal costs and items (i) and (ii) are referred to as "unbundling costs."
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to the 2025 Moe's Southwest Grill Franchise Disclosure Document, 'unbundling costs' refer to the expenses a franchisee may incur if they terminate the dispensing equipment lease before 100 months from the equipment's installation date. These costs are associated with the removal, remanufacturing, and the unamortized portion of the installation.
Specifically, unbundling costs include the actual cost of removing the equipment, encompassing standard shipping and handling charges, and the cost of remanufacturing the equipment. Additionally, it covers the unamortized portion of the costs related to the initial installation and any non-serialized parts, such as pumps, racks, regulators, and other ancillary equipment.
For a prospective Moe's Southwest Grill franchisee, this means that prematurely terminating the equipment lease can lead to significant expenses beyond just returning the equipment. Franchisees should carefully consider the lease terms and potential implications of early termination to avoid unexpected costs. It is important to note that these costs are designed to recoup the franchisor's initial investment in the equipment and its installation, which is a common practice in franchise agreements involving leased equipment.