Under what circumstances can Moes Southwest Grill terminate the equipment lease?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11. REMEDIES. Upon the occurrence of any Default or at any time thereafter, Company may terminate this Lease as to any or all items of Equipment, may enter the premises where the Equipment is located and retake possession of the Equipment at Customer's expense, and will have all other remedies at law or in equity for breach of the Lease. Customer acknowledges that in the event of a breach of Sections 4 or 5 or a failure or refusal of Customer to relinquish possession of the Equipment in breach of this section following termination or Default, Company's damages would be difficult or impossible to ascertain, and Customer therefore agrees that Company will have the right to an injunction in any court of competent jurisdiction restraining said breach and granting Company the right to immediate possession of the Equipment.
- 12. LIQUIDATED DAMAGES. If Customer acts in violation of the prohibitions described in Section 3 of this Lease, or is unable or unwilling to return the Equipment to Company in good working order, normal usage wear and tear excepted, at the expiration or termination of the Lease, Customer will pay as liquidated damages the total of (i) the amount of past-due lease payments, discounted accelerated future lease payments, and the value of Company's residual interest in the Equipment, plus (ii) all tax indemnities associated with the Equipment to which Company would have been entitled if Customer had fully performed this Lease, plus (iii) costs, interest, and attorneys' fees incurred by Company due to Customer's violation of Section 3 or its failure to return the Equipment to Company, minus (iv) any proceeds or offset from the release or sale of the Equipment by Company.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to the 2025 Moe's Southwest Grill Franchise Disclosure Document, Moe's Franchisor SPV LLC can terminate the equipment lease under specific circumstances related to default by the customer (franchisee). Specifically, if a franchisee defaults on the lease agreement, Moe's Southwest Grill has the right to terminate the lease for any or all items of equipment. Following termination, Moe's Southwest Grill can enter the premises where the equipment is located and retake possession of the equipment, with the franchisee bearing the expense. Additionally, Moe's Southwest Grill retains all other legal and equitable remedies for breach of the lease.
If the franchisee breaches sections 4 or 5 of the lease, or fails to relinquish possession of the equipment after termination or default, Moe's Southwest Grill is entitled to seek an injunction from a court to prevent the breach and ensure the immediate return of the equipment. This provision acknowledges that quantifying damages in such scenarios would be difficult, thus justifying the right to injunctive relief.
In the event of a violation of prohibitions described in Section 3 of the lease, or if the franchisee cannot or will not return the equipment in good working order at the end of the lease, the franchisee will be liable for liquidated damages. These damages include past-due lease payments, discounted accelerated future lease payments, the value of Moe's Southwest Grill's residual interest in the equipment, tax indemnities, and any costs, interest, and attorneys' fees incurred by Moe's Southwest Grill. Any proceeds from the resale of the equipment by Moe's Southwest Grill will be deducted from the total damages owed by the franchisee.