What agreements are the confidentiality, in-term, and post-term covenants not to compete from the Southern Steer Franchise Agreement incorporated into for Multi-Unit Developers?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
11. MULTI-UNIT DEVELOPER 'S COVENANTS NOT TO COMPETE
- Obligation. The Multi-Unit Developer, Controlled Entity (if any) and their Owners acknowledge and agree that the confidentiality and in-term and post-term covenants not to complete set out in the Franchise Agreement are incorporated into this Agreement by reference. The Multi-Unit Developer and Controlled Entity, (if any) and their Owners further acknowledge that they are subject to the confidentiality and in-term and post-term non-compete covenants set out in the Franchise Agreement. The Multi-Unit Developer, Controlled Entity and their Owners will enter into the Non-Competition and Non-disclosure Agreement.
- Effect on Other Agreements. The covenants not to compete set forth in this Section 11 will apply and be enforced independently of any covenant not to compete set forth in any other agreements between the Franchisor and the Multi-Unit Developer (or a Controlled Entity) and/or the Owners.
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the confidentiality, in-term, and post-term covenants not to compete outlined in the Franchise Agreement are incorporated by reference into the Multi-Unit Development Agreement. This means that Multi-Unit Developers, their Controlled Entities (if any), and their Owners are subject to these covenants as if they were directly stated in the Multi-Unit Development Agreement itself. Furthermore, the Multi-Unit Developer, Controlled Entity, and their Owners must enter into a Non-Competition and Non-disclosure Agreement. These covenants are enforced independently of any non-compete agreements between Southern Steer and the Multi-Unit Developer or Owners. This ensures that Southern Steer's interests are protected across all agreements.
The in-term covenant not to compete restricts the franchisee, owners, and recipients from engaging in any Competitive Activity or Competitive Business during the Initial Term of the Franchise Agreement, any Interim Period, and any Successor Term. This restriction applies whether they act on their own account or as an employee, principal, agent, franchisee, independent contractor, consultant, affiliate, licensee, partner, officer, director, shareholder, member, manager, or owner of any other person or Entity. Any such activity requires the prior written consent of Southern Steer, which may be withheld at their discretion.
The post-term covenant not to compete extends for 24 months after the termination, transfer, assignment, or expiration of the Franchise Agreement, or after a final order enforcing the covenant. During this period, the franchisee, owners, and recipients are prohibited from engaging in any Competitive Business or Competitive Activity within specific geographic areas. These areas include the Franchised Location, the Protected Area, within 50 miles of the outer boundaries of the Protected Area, within 50 miles from the Franchised Location, within 50 miles of any other Southern Steer Business, or within any Protected Area or territory granted by Southern Steer under a Multi-Unit Development Agreement, franchise agreement, license agreement, or other territorial agreement.
These restrictions are typical in franchising to protect the brand's market share, customer relationships, and confidential information. Prospective Multi-Unit Developers should carefully review these covenants to understand the full scope of their obligations and restrictions, both during the term of the agreement and after its termination. They should also be aware that these covenants are in addition to any other non-compete agreements they may have with Southern Steer.