What constitutes 'Major Assets' in the context of a Southern Steer Multi-Unit Developer's obligations?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Multi-Unit Developer will not Transfer or otherwise dispose of any interest in or any part of any Ownership Interest in the Multi-Unit Developer ("Major Assets") to any purchaser without first offering the same to the Franchisor in a written offer that contains the purchase price, payment terms, and all other material terms and conditions of the proposed transaction with the third party, including price and payment terms ("Multi-Unit Developer's Offer").
The Franchisor will have 30 days after receipt of the Multi-Unit Developer's Offer to give the Multi-Unit Developer written notice of the Franchisor's desire to either waive its option to purchase ("Waiver Notice") or its intention to exercise its rights to purchase or acquire the Major Assets according to the terms contained in the Multi-Unit Developer's Offer ("Notice of Intent to Purchase").
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, a Multi-Unit Developer's 'Major Assets' are defined as any interest in or part of any Ownership Interest in the Multi-Unit Developer. Before a Multi-Unit Developer can transfer or dispose of these Major Assets, they must first offer them to Southern Steer. This offer must be in writing and include the purchase price, payment terms, and all other material terms and conditions of the proposed transaction with the third party.
Southern Steer has 30 days after receiving the Multi-Unit Developer's offer to respond. During this time, Southern Steer can either waive its option to purchase the assets or express its intention to exercise its rights to purchase or acquire the Major Assets under the terms specified in the Multi-Unit Developer's offer. This process allows Southern Steer to maintain control over who becomes involved in the ownership of its franchises and ensures that any potential new owners meet their standards.
This requirement is significant for prospective Multi-Unit Developers as it restricts their ability to freely transfer ownership interests without Southern Steer's prior consent. It also gives Southern Steer the first right of refusal, potentially delaying or complicating any sale of the Multi-Unit Developer's ownership interest. Multi-Unit Developers should carefully consider this restriction and its potential impact on their exit strategy or ability to raise capital.