What constitutes a 'Default' under the Southern Steer Franchise Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
r non-payment of rent or other legal reasons or the Franchisee is evicted from the Franchised Location.
- 20.2. Notice of Termination. If this Agreement is terminated by the Franchisor pursuant to Section 20.1, then the Franchisor will give the Franchisee written notice that this Agreement is terminated and, in that event, the effective date of termination of this Agreement will be the date of the written notice of termination is delivered to the Franchisee in accordance with the notice provision set out in Section 29.
- 20.3. Termination after Failure to Cure. The Franchisee will be deemed to be in Default under this Agreement and the Franchisor has the right to exercise its remedies described in Sections 20.4 and 20.5, including termination of this Agreement and all rights granted under this Agreement if: (i) within 30 days after Franchisor sends the Franchisee written notification setting out the nature of the default ("Notice of Default"); (ii) within any shorter period expressly set forth in the following clauses as to such Default; or (iii) any longer cure period required by applicable law, the Franchisee does not correct the default to Franchisor's satisfaction for any of the following events (for the purposes of this Agreement, an alleged breach of this Agreement by the Franchisee will be deemed to be "corrected" if both the Franchisor and the Franchisee agree in writing that the alleged breach has been corrected):
- (a) the Franchisee has not purchased or leased a site for the Franchised Location within 90 days after the Effective Date of this Agreement;
- (b) the Franchisee has not obtained all licenses, permits, and certifications required for the occupancy, opening, operating, and service and sale of food for its Southern Steer Business from the appropriate Governmental Authorities at least 10 days before the Required Opening Date, in which case the Franchisee will have a cure period of five business days after the Franchisor sends the Franchisee the Notice of Default;
- (c) the Franchisee or Operating Principal and the Designated Manager has not satisfactorily completed the Initial Training Program required under this Agreement prior to the Required Opening Date, in which case the Franchisee will have a cure period of 15 days after the Franchisor sends the Franchisee the Notice of Default;
- (d) the Franchisee fails to open the Southern Steer Business by the Required Opening Date;
- (e) subject to Sections 20.120.1(s) and 20.1(t), the Franchisee violates any federal, state or municipal law, rule, code or regulation applicable to the Franchisee's Southern Steer Business in which case the Franchisee will have a cure period of 15 days after Franchisee becomes aware or reasonably should have become aware of such breach;
- (f) the Franchisee breaches any material provision, term or condition of this Agreement or the Brand Manual or any other agreement that Franchisee, its affiliates, Owners, Operating Principal, officers or directors have with Franchisor;
- (g) the Franchisee fails to obtain Franchisor's prior written approval or consent required by this Agreement;
- (h) the Franchisee fails to timely pay any Fees, taxes, rents or any other monetary obligations due and payable to the Franchisor or an Affiliate of the Franchisor pursuant to this Agreement or any other agreement, in which case the Franchisee will have a cure period of five business days after the due date of such Fees to correct the breach by making full payment to the Franchisor or the relevant Affiliate of the Franchisor, as the case may be, together with Interest and Late Charges on the past-due obligations as set out in Section 3.3(c);
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 can be deemed in default of their franchise agreement under various circumstances, which can then trigger certain remedies for the franchisor. These events range from failing to meet deadlines related to site acquisition, obtaining necessary licenses, completing training, and opening the Southern Steer Business, to issues with payments, management, and compliance with regulations and other agreements. The franchisor typically provides a period to correct the default, but failure to do so can lead to termination of the agreement.
Specifically, a franchisee is in default if they fail to purchase or lease a site within 90 days of the agreement's effective date, fail to obtain necessary licenses and permits 10 days before the required opening date (with a 5-day cure period after notice), or if the franchisee, operating principal, and designated manager do not complete the initial training program before the required opening date (with a 15-day cure period after notice). Furthermore, failing to open the Southern Steer Business by the required opening date also constitutes a default.
Additional causes for default include having checks or EFTs dishonored due to insufficient funds or closed bank accounts, cancellation of required licenses or permits, failure to appoint a qualified replacement designated manager within 30 days of the previous manager's departure, breaching any other agreement with the franchisor or its affiliates without curing the breach, or committing any act that constitutes good cause under applicable law or court decisions. The franchisor retains the right to discontinue supplying items, demand cash on delivery, or suspend the franchisee's right to use the Southern Steer system and website upon delivering a Notice of Default.
These default conditions are important for prospective franchisees to understand, as they outline the obligations and potential pitfalls that could jeopardize their franchise agreement. Franchisees should be aware of the cure periods associated with each type of default and take proactive steps to ensure compliance with all requirements to avoid potential termination of their franchise agreement with Southern Steer.