Under what circumstances can Moes Southwest Grill change the credit or payment terms for a franchisee?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, the Disclosure Document for Moe's Franchisor SPV LLC for use in the State of Maryland is amended as follows:
ITEM 5 INITIAL FEES
- Based upon our financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until we complete our pre-opening obligations under the Franchise Agreement. If a franchisee signs a Multi-Unit Addendum to a Franchise Agreement, all initial fees and payments owed by such franchisee under each of the Franchise Agreements that is subject to the Multi-Unit Addendum shall be deferred until we complete our pre-opening obligations under the applicable Franchise Agreement.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the circumstances under which Moe's Southwest Grill can change the credit or payment terms for a franchisee are not explicitly detailed in the provided excerpts. The documents do not contain specific clauses outlining the conditions or events that would allow Moe's Southwest Grill to modify these terms.
However, the Maryland Addendum included in the FDD does state that initial fees and payments owed by franchisees may be deferred based on the franchisor's financial condition, specifically if the Maryland Securities Commissioner requires a financial assurance. This deferral lasts until Moe's Southwest Grill completes its pre-opening obligations under the Franchise Agreement. This suggests that financial conditions and regulatory requirements can influence the timing of fee payments.
To fully understand the potential for changes to credit or payment terms, a prospective Moe's Southwest Grill franchisee should directly ask the franchisor about specific clauses in the Franchise Agreement that address modifications to payment schedules, credit arrangements, or any other financial obligations. Further inquiry should focus on what specific events or conditions could trigger such changes and what recourse a franchisee has if changes are implemented.