MOE'S SOUTHWEST GRILL Franchise Review (2026): Costs, Fees, Revenue Potential

• Category: Food & Beverage
• Initial Investment: $624,725 to $1,315,550
• Franchise Fee: $30,500
• Royalty: 5% of Net Sales
• Marketing / Ad Fee: Currently 3% of Net Sales, with the right to increase to 4%
• Key additional recurring fees: Advertising cooperative contribution; local marketing obligation; learning management system fee of $210 per year; possible sublease administration fee of $200 per month; late reporting fee currently $50 per week; training and support fees in certain situations
• Number of locations: 591 franchised restaurants in the U.S. as of December 31, 2024; 596 total outlets including 5 affiliate-owned restaurants
• Best Fit: Semi-absentee possible, but still operationally intensive

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The estimated initial investment ranges from $624,725 to $1,315,550, with a stated initial franchise fee of $30,500. The disclosure also estimates additional funds of $25,000 to $53,000.

This appears to be a high-cost restaurant opening by absolute dollar amount. The main cost drivers are not fully broken out here line by line, but the overall range suggests meaningful spending on site development, restaurant buildout, equipment, and opening capital needs typical of a physical restaurant operation.

The wide range also matters. A spread of more than $690,000 between the low and high end indicates that site conditions, format, and buildout variables can materially affect required capital.

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• Royalty fee: 5% of Net Sales, payable weekly
• Advertising contribution: Currently 3% of Net Sales, may increase up to 4%
• Advertising cooperative contribution: Amount set by the cooperative
• Local marketing obligation: Required each calendar quarter; the disclosure indicates Moe's may specify a minimum spend and change it with notice
• Promotions and advertising materials: Up to 110% of actual costs and expenses related to goods purchased
• Interest on late amounts: Lesser of 1.5% per month or the maximum legal rate
• Late reporting fee: Currently $50 per week
• Learning management system license fee: Currently $210 per year
• Sublease administration fee: Currently $200 per month if you sublease from the franchisor
• Training / support fees: Various fees may apply for additional training, consulting, conferences, or on-site assistance

Overall, the recurring fee load is meaningful. The base royalty plus ad fund alone totals 8% of Net Sales currently, and could reach 9% if the ad fund increases, before cooperative contributions, local marketing, and other situational charges.

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Yes, the FDD includes an Item 19 financial performance representation for Traditional Franchises that reported sales in all 52 weeks of fiscal year 2024.

Reported 2024 net sales for eligible Traditional Franchises

• System average net sales: $1,235,422
• System median net sales: $1,166,787
• System range: $371,964 to $3,097,451

By quartile

• Top quartile:
  • Average: $1,821,614
  • Median: $1,754,949
  • Range: $1,464,882 to $3,097,451
• 2nd quartile:
  • Average: $1,312,376
  • Median: $1,299,681
  • Range: $1,166,787 to $1,459,940
• 3rd quartile:
  • Average: $1,049,509
  • Median: $1,059,238
  • Range: $907,995 to $1,164,124
• Bottom quartile:
  • Average: $753,347
  • Median: $782,366
  • Range: $371,964 to $906,553

Sample and exclusions

• There were 502 Traditional Franchises as of December 29, 2024
• 485 locations (96.6%) were included in the table
• Excluded were:
  • 11 Traditional Franchises that did not report sales in all 52 weeks
  • 5 Traditional Franchises that opened during the year
  • plus non-traditional locations, co-branded locations, and affiliate-owned restaurants

The spread is wide. Average net sales in the top quartile were about $1.82 million, versus about $753,000 in the bottom quartile. That suggests location quality, operating execution, and format differences can materially affect revenue outcomes.

Just as important, these figures are net sales, not profit. They do not show food costs, labor, occupancy, debt service, owner compensation, or other operating expenses. The Item 19 figures are also stated as not audited.

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• Model: Primarily B2C restaurant sales
• Revenue pattern: Ongoing daily sales rather than one-time project revenue
• Operating characteristics: Physical restaurant operation with site-dependent performance, staffing needs, equipment, training requirements, and ongoing marketing obligations
• Ownership structure: Semi-absentee ownership appears possible because owners are not required to participate in actual operation, though they must devote best efforts to proper and effective operation and may serve in a designated contact role with consent
• Territory: The disclosure indicates a protected territory, but not an exclusive one

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Advantages

• Item 19 includes 2024 net sales data for 485 eligible traditional franchised restaurants, which gives a substantial operating sample
• The system is relatively large, with 591 franchised U.S. restaurants at year-end 2024
• Owners are not required to personally operate the restaurant day to day, allowing for a manager-led structure if approved and staffed appropriately
• The FDD provides quartile revenue data, which helps show the range between higher- and lower-performing units

Considerations

• The initial investment is high at $624,725 to $1,315,550
• Ongoing fees are substantial, with 5% royalty plus 3% ad fund currently, potentially 4% for the ad fund later, before other marketing obligations
• Revenue variability is significant, with reported net sales ranging from $371,964 to $3,097,451
• Item 19 excludes non-traditional, co-branded, affiliate-owned, and some newer traditional units, so reported results do not represent every format in the system
• The franchised outlet count declined from 606 to 591 in 2024, and total outlets declined from 612 to 596

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This franchise may fit someone comfortable with a high-cost restaurant investment, ongoing staffing and operating complexity, and a manager-led or semi-absentee structure.

It likely does not fit buyers seeking a low-cost entry point, a simple home-based model, or a business where owner involvement and operating demands are minimal.

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• The franchise term is 20 years, which creates a long commitment if the location underperforms
• Some recurring charges are variable or discretionary, including cooperative advertising, local marketing requirements, and certain support or training fees
• If the restaurant is subleased from the franchisor, additional monthly administrative cost may apply on top of occupancy-related obligations
• The disclosure indicates litigation mentions, which warrants review of the specific claims and context in the FDD
• The territory is described as protected, but the disclosure does not clearly establish full exclusivity

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MOE'S SOUTHWEST GRILL presents a mature restaurant franchise with a large unit base and a useful set of disclosed revenue figures for traditional franchised restaurants. The main tradeoff is straightforward: buyers get a clearer view of reported sales ranges than many concepts provide, but they must accept a high initial investment, meaningful recurring fees, and wide variation in unit-level revenue.

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