What constitutes a 'material adverse effect' on the Southern Steer brand that could lead to termination?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
usinesses, perform its obligations under this Agreement or could have a material adverse effect on the Marks, goodwill, reputation or System;
(g) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity materially violates any federal, state or municipal law, rule, code or regulation applicable to the operations of the Multi-Unit Developer's or Controlled Entity's Southern Steer Businesses, including a violation of any health department rules or regulations relating to any food safety standards that would in any way endanger the health or well-being of any of the customers or guests of the Multi-Unit Developer's or Controlled Entity's Southern Steer Businesses;
(h) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or a Controlled Entity breaches any provision, term or condition of this Agreement or any Franchise Agreement or other agreement between Multi-Unit Developer or Controlled Entity and Franchisor or its Affiliates and fails to cure such default within the period prescribed in such Franchise Agreement or other agreement;
(i) any check or EFT issued by the Multi-Unit Developer or Controlled Entity is dishonored because of insufficient funds (except where the check is dishonored because of bank error or an error in bookkeeping or accounting) or closed accounts more than three times during the Term of this Agreement;
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, several actions can constitute a 'material adverse effect' that could lead to the termination of a Multi-Unit Development Agreement. These include violations of laws or regulations that endanger customer health, any action that significantly damages the goodwill associated with the Southern Steer brand, or engaging in unauthorized business practices using the Southern Steer marks.
Specifically, if a Multi-Unit Developer, its Owners, Operating Principal, Guarantors, or any Controlled Entity materially violates any federal, state, or municipal law, rule, code, or regulation applicable to the operations of the Southern Steer Businesses, including health department rules related to food safety standards that endanger customer health, it could lead to termination. Similarly, if any of these parties engage in any act or conduct that materially impairs the goodwill associated with the Southern Steer Butcher brand or the System, and they fail to correct the breach within 24 hours after receiving written notice from Southern Steer, it could result in termination.
Additionally, if a Multi-Unit Developer or any Controlled Entity engages in any unauthorized business or practice or sells any unauthorized product or service under Southern Steer's Marks or a confusingly similar name, it could lead to termination. These stipulations are designed to protect the Southern Steer brand's reputation and ensure consistent quality and safety standards across all franchise locations.
These conditions highlight the importance of adhering to all legal and brand standards to maintain the franchise agreement and avoid potential termination. A prospective franchisee should carefully review these conditions and ensure they have the resources and commitment to comply with all requirements.