Is Southern Steer allowed to offer or franchise other businesses within a franchisee's Protected Area?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
-(c) To offer and sell, and/or license or franchise others to offer and sell, products and services for Other Businesses and market Other Businesses to anyone, including prospective and existing Franchisees anywhere within or outside of Franchisee's Protected Area;
- 1.4.
Protected Area.
Except as provided to the contrary in this Section, the Franchisee will receive the nonexclusive "Protected Area" defined in the Attachment A attached to this Agreement.
Subject to the reservation of rights set out in Sections 1.2 (b)-(g) and Section 1.6 and so long as the Franchisee is not in default of this Agreement or any other agreement with Franchisor or any of Franchisor's Affiliates past applicable cure periods, the Franchisor and its Affiliates will not have the right to own, operate, franchise or license others to own or operate a Southern Steer Business physically located within the Franchisee's Protected Area, with the exception of Non-Traditional Locations.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, Southern Steer retains significant rights within a franchisee's protected area. Specifically, Southern Steer has the right to offer and sell, and/or license or franchise others to offer and sell, products and services for other businesses and market other businesses to anyone, including prospective and existing franchisees, within or outside a franchisee's protected area. This reservation of rights is subject to certain conditions outlined in the franchise agreement.
This means that while a franchisee is granted a protected area, Southern Steer can still operate or franchise other concepts, potentially even competing ones, within that area. The only exception to this is that Southern Steer cannot operate, franchise, or license others to operate a Southern Steer Business physically located within the Franchisee's Protected Area, with the exception of Non-Traditional Locations, as long as the franchisee is not in default of the agreement.
This clause has significant implications for prospective franchisees. It highlights that the protected area is not exclusive in the traditional sense, as Southern Steer can introduce other business ventures within the franchisee's territory. Franchisees should carefully consider this when evaluating the potential market and competition within their protected area. It is essential to understand the types of 'Other Businesses' Southern Steer might introduce and how those could impact the Southern Steer Business.
Prospective franchisees should seek clarification from Southern Steer regarding their plans for introducing other businesses within protected areas. Understanding the scope and nature of these potential ventures is crucial for assessing the true value and security of the protected area granted in the franchise agreement. This understanding will help franchisees make informed decisions about their investment and business strategy.