In a bankruptcy proceeding, what aspects of the Southern Steer Multi-Unit Developer's business are subject to Section 9 of the agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity is determined to be insolvent within the meaning of applicable state or federal law, any involuntary petition for bankruptcy is filed against the Multi-Unit Developer and the Multi-Unit Developer is unable, within a period of 60 days from such filing, to obtain the dismissal of the involuntary petition, or the Multi-Unit Developer files for bankruptcy or is adjudicated a bankrupt under applicable state or federal law;
The Multi-Unit Developer will not Transfer or otherwise dispose of any interest in or any part of (a) the Multi-Unit Developer 's interest in this Agreement, including the right of the Multi-Unit Developer to develop Southern Steer Businesses in the Development Territory except as provided for in Section 7.2.
The Multi-Unit Developer will not Transfer or otherwise dispose of any interest in or any part of any Ownership Interest in the Multi-Unit Developer ("Major Assets") to any purchaser without first offering the same to the Franchisor in a written offer that contains the purchase price, payment terms, and all other material terms and conditions of the proposed transaction with the third party, including price and payment terms ("Multi-Unit Developer's Offer").
The Franchisor will have 30 days after receipt of the Multi-Unit Developer's Offer to give the Multi-Unit Developer written notice of the Franchisor's desire to either waive its option to purchase ("Waiver Notice") or its intention to exercise its rights to purchase or acquire the Major Assets according to the terms contained in the Multi-Unit Developer's Offer ("Notice of Intent to Purchase").
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, Section 9 of the agreement, concerning the franchisor's option to purchase, is relevant in bankruptcy proceedings. Specifically, if the Multi-Unit Developer files for bankruptcy, is adjudicated bankrupt, or has an involuntary petition for bankruptcy filed against them and cannot dismiss it within 60 days, these events trigger considerations under the agreement.
Section 9 outlines the conditions under which the Multi-Unit Developer cannot transfer or dispose of any interest in the agreement or any Ownership Interest in the Multi-Unit Developer ('Major Assets') without first offering it to Southern Steer. This includes providing Southern Steer with a written offer containing the purchase price, payment terms, and all other material terms of the proposed transaction.
Southern Steer then has 30 days to respond with either a Waiver Notice (waiving their option to purchase) or a Notice of Intent to Purchase, indicating their intention to acquire the Major Assets under the terms of the Multi-Unit Developer's offer. This process ensures that Southern Steer has the first right to acquire the Multi-Unit Developer's business interests, even in a bankruptcy scenario, protecting the brand's integrity and controlling the transfer of assets within its network.