Under what conditions are transfer fees collectable for a Moes Southwest Grill franchise?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
ee. If, as a condition of the Transfer, the lease is renewed or extended for one year or more, the then-current lease renewal fee (if any) will be assessed against the transferee.
- N. We must determine, in our sole discretion, that the purchase price and payment terms will not adversely affect the operation of the Franchised Business, and if you or your Owners finance any part of the purchase price, you and they must agree that all obligations under promissory notes, agreements, or security interests reserved in the Franchised Business are subordinate to the transferee's obligation to pay all amounts due to us and our affiliates and otherwise to comply with this Agreement.
- 16.4 Non-Control Transfers. For any Transfer that does not result in a Control Transfer, you must give us advance notice and submit a copy of all proposed contracts and other information concerning the Transfer and transferee that we may request. We will have a reasonable time (not less than 30 days) after we have received all requested information to evaluate the proposed Transfer. You and/or your transferee must satisfy, in addition to others that we may specify, the conditions in Sections 16.3.B. (pay all sums owed), 16.3.C. (not in default), 16.3.E. (transferee meets qualifications), 16.3.H. (sign assignment and guaranty), 16.3.I. (sign general release), and 16.3.L. (remain liable for pre-Transfer obligations). You must pay us a transfer fee equal to 10% of the then-current initial franchise fee. You and your Owners must sign the form of agreement and related documents that we then specify to reflect your new ownership structure. We may withhold our consent on any reasonable grounds or give our consent subject to reasonable conditions.
- 16.5 Related Party Transfers. Notwithstanding anything to the contrary in Section 16.3 (Control Transfer) or 16.4 (Non-Control Transfers), you may Transfer cumulatively (i) up to a 49% (100% on your death or disability) interest in this Agreement, the Franchised Business, or your Entity to your spouse, your parent, or your child or (ii)
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to the 2025 Moe's Southwest Grill Franchise Disclosure Document, transfer fees are collectable under specific conditions when a franchisee transfers their interest in the franchise. For non-control transfers, where the transfer does not result in a change of control, Moe's Southwest Grill requires advance notice, submission of all proposed contracts, and any other information concerning the transfer and transferee that they may request. In these situations, the franchisee must pay a transfer fee equal to 10% of the then-current initial franchise fee.
For transfers to related parties, such as a spouse, parent, or child, a franchisee may transfer up to 49% interest in the agreement, the franchised business, or their entity (or up to 100% on death or disability). A 100% interest can also be transferred to any of the original guarantors to the agreement. In these cases, the franchisee must provide prior written notice, comply with specific conditions, and pay a transfer fee equal to 10% of the then-current initial franchise fee. However, no transfer fee is due in the event of death or incapacity of the franchisee or an owner.
In the event of a transfer that does result in a change of control, the franchisee must pay Moe's Southwest Grill a transfer fee equal to 50% of the amount of the then-current initial franchise fee. The transferee must also agree to upgrade and remodel the franchised business to conform to Moe's Southwest Grill's then-current standards for quality and appearance, and must sign the then-current form of franchise agreement. The franchisee and owners must also agree to remain liable for all obligations to Moe's Southwest Grill arising before the effective date of the transfer.