What are the consequences if the Multi-Unit Developer transfers the Southern Steer Multi-Unit Development Agreement without complying with the provisions of Section 7.2?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (o) the Multi-Unit Developer transfers or otherwise assigns this Agreement or the rights to develop a Southern Steer Business hereunder, or an interest in the Multi-Unit Developer Entity, without complying with the provisions of Section7.2.
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, if the Multi-Unit Developer transfers the Multi-Unit Development Agreement without complying with Section 7.2, it constitutes a breach of the agreement. Specifically, the FDD states that if the Multi-Unit Developer transfers the agreement or the rights to develop a Southern Steer Business without adhering to the provisions of Section7.2, it can lead to termination of the agreement by the franchisor.
This means that a Multi-Unit Developer must follow the procedures outlined in Section 7.2 when transferring their rights or the agreement itself. Failure to do so gives Southern Steer the right to terminate the agreement, which would result in the loss of rights to develop further Southern Steer locations in the designated territory.
This provision is designed to protect Southern Steer's interests by ensuring that any transfer of development rights is done with their knowledge and approval, maintaining control over who is developing their brand. Prospective Multi-Unit Developers should carefully review Section 7.2 to understand the specific requirements for transferring the agreement and ensure compliance to avoid potential termination.