What constitutes a 'Controlled Entity' in the context of the Southern Steer Multi-Unit Development Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- Controlled Entity. "Controlled Entity" will mean an Entity in which (a) the Multi-Unit Developer is the Owner of at least 51% of the Ownership Interests in the Entity; or (b) the Multi-Unit Developer 's Owners are the Owners of at least 51% of the Ownership Interests in the Entity.
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, a 'Controlled Entity' in the context of the Multi-Unit Development Agreement refers to a business entity where the Multi-Unit Developer maintains significant ownership. Specifically, a Controlled Entity is defined as an entity in which either the Multi-Unit Developer owns at least 51% of the ownership interests, or the Multi-Unit Developer's owners collectively own at least 51% of the ownership interests. This definition ensures that the Multi-Unit Developer retains control over the operations of the Southern Steer businesses developed under the agreement, even if those businesses are technically operated through a separate legal entity.
This requirement has several practical implications for prospective Southern Steer multi-unit franchisees. First, it means that the Multi-Unit Developer cannot simply delegate the responsibility for operating the franchises to an entirely independent third party. The Multi-Unit Developer (or its owners) must maintain a controlling ownership stake in any entity that operates a Southern Steer franchise under the Multi-Unit Development Agreement. This ensures that the Multi-Unit Developer remains actively involved in the management and oversight of the franchises.
Furthermore, all owners of the Controlled Entity are subject to approval by Southern Steer. This approval process ensures that all individuals involved in the ownership and operation of the Southern Steer franchises meet the franchisor's criteria for franchisees. This requirement helps Southern Steer maintain consistent standards across all of its franchise locations, regardless of whether they are operated directly by the Multi-Unit Developer or through a Controlled Entity. The Multi-Unit Developer cannot be relieved of their obligations under the Multi-Unit Development Agreement even if a Controlled Entity is used. The Multi-Unit Developer is still responsible for ensuring compliance with the terms and conditions of the agreement.