What conditions apply to a transfer of the Southern Steer franchise subject to the provisions of Section 19?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
n control of the Southern Steer Business, so long as the Franchisee provides the Franchisor with prior written notice of such Transfer and the Franchisee is not in default of any of its obligations under this Agreement. Notwithstanding the forgoing, if this Agreement is Transferred by the individual Franchisee to an Entity that is wholly owned by the Franchisee, the Franchisee must pay the Franchisor $1,000 prior to the Transfer for legal expenses incurred by Franchisor to prepare transfer documents.
- 18.5. Conditions to Transfer by Franchisee. Subject to the provisions of Section 19, the Franchisee will not Transfer any interest in or any part of this Agreement, any direct or indirect interest in Franchisee, or the Southern Steer Business to any person or Entity ("Transferee") without the prior written approval of the Franchisor. The Franchisor will not withhold its written consent to the Transfer by the Franchisee if Franchisor does not exercise its rights under Section 19 of this Agreement, the Transfer does not violate any of the terms of this Agreement, and the Franchisee is in full compliance with the following terms:
- (a) Franchisee, Operating Principal and Owners are in full compliance with this Agreement and all other agreements between Franchisor or its Affiliate and Franchisee, Operating Principal and/or Owner(s);
- (b) if the Transferee(s), its owners or affiliates are a party to any agreement with Franchisor or its Affiliates, they must be in full compliance with any such agreement;
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, a franchisee cannot transfer any interest in the Franchise Agreement, any direct or indirect interest in the Franchisee, or the Southern Steer Business to any person or entity without prior written approval from Southern Steer, subject to the provisions of Section 19. Southern Steer will not withhold consent if it does not exercise its rights under Section 19, the transfer does not violate any terms of the agreement, and the franchisee is in full compliance with specific terms. These terms include compliance with all agreements between Southern Steer and the franchisee, providing written notice of the proposed transfer at least 30 days before closing, paying all monetary obligations to Southern Steer in full, and agreeing in writing to observe all applicable provisions of the agreement, including non-compete covenants.
Section 19 of the Southern Steer Franchise Agreement outlines the franchisor's option to purchase the franchise before a franchisee can transfer it to a third party. Before transferring any interest in the Southern Steer business or major assets, the franchisee must first offer it to Southern Steer in writing, including 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 (exercising their right to buy the business under the offered terms).
If Southern Steer does not purchase the business, but the franchisee negotiates changes to the terms with a potential buyer, the franchisee must re-offer the business to Southern Steer under the new terms. Failure to do so constitutes a material breach of the agreement. These restrictions on transfer are acknowledged by both the franchisee and owners as reasonable and necessary to protect the Southern Steer system, marks, reputation, and image, benefiting the franchisor, franchisee, and all other franchisees. Any transfer is not effective until Southern Steer receives a fully executed copy of all transfer documents and provides written consent.
These conditions ensure that Southern Steer maintains control over who enters its franchise system and that the brand's standards and reputation are upheld. For a prospective franchisee, this means understanding that selling the business requires offering it to Southern Steer first and adhering to specific notification and compliance requirements. It is also important to note that these transfer restrictions are in place to protect the franchisor, the franchisee, and the entire network of Southern Steer franchisees.