Who is considered a third-party beneficiary of the Southern Steer Associate Agreement and entitled to enforce it?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) The Associate also agrees that money damages alone cannot adequately compensate the Franchisee or the Franchisor if there is a breach of this Agreement by Associate, and that injunctive relief against the Associate is essential for the protection of the Franchisor and the Franchisee. Associate agrees therefore that, if the Franchisee or the Franchisor alleges that Associate has breached this Agreement, then the Franchisee and Franchisor will have the right to petition a court of competent jurisdiction for injunctive relief against the Associate, in addition to all other remedies that may be available. The Franchisee and/or Franchisor will not be required to post a bond or other security for any injunctive proceeding. If ex parte injunctive relief is granted against the Associate, then the Associate will have the right to petition the court for a hearing on the merits at the earliest time convenient to the court.
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 the 2025 Southern Steer Franchise Disclosure Document, both the Franchisee and Franchisor are entitled to enforce the Associate Agreement. Specifically, the franchisor is considered a third-party beneficiary. This agreement outlines the obligations and restrictions on an associate's use and disclosure of Southern Steer's confidential information, trade secrets, and marks.
This means that Southern Steer, as the franchisor, has the right to take legal action against the associate if they breach the agreement, such as by disclosing confidential information or engaging in activities that compete with the Southern Steer business. This right is in addition to the rights of the franchisee, who directly employs the associate. Both the franchisee and Southern Steer can seek remedies such as injunctive relief (a court order to stop the associate from continuing the harmful behavior) and monetary damages.
This arrangement protects Southern Steer's interests by ensuring that even employees of franchisees are bound by confidentiality and non-competition obligations. It also allows Southern Steer to directly enforce these obligations, rather than relying solely on the franchisee to do so. This is particularly important because the associate's access to confidential information and trade secrets could harm the entire Southern Steer franchise system if misused.
Prospective franchisees should understand that this agreement is designed to safeguard the Southern Steer system's proprietary information and goodwill. It also highlights the importance of carefully managing employees and ensuring they understand their obligations under the Associate Agreement. Franchisees should consult with legal counsel to fully understand their rights and responsibilities in enforcing this agreement.