What constitutes a material breach of the Southern Steer Multi-Unit Development Agreement if the Multi-Unit Developer negotiates changes with a purchaser?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Franchisor does not purchase the Major Assets from the Multi-Unit Developer under the terms and conditions contained in the Multi-Unit Developer's Offer, then if during any negotiations with a purchaser the Multi-Unit Developer agrees to negotiate, change, delete, or modify any of the terms and conditions contained in the Multi-Unit Developer's Offer or the terms and conditions contained in the most recent version of the definitive agreement or agreements proposed by the Multi-Unit Developer during negotiations that were not acceptable to the Franchisor, then the Multi-Unit Developer will be required to re-offer to sell the Major Assets to the Franchisor under the new terms and conditions offered to the purchaser in accordance with the provisions of this Article, and the Multi-Unit Developer's failure to do so will be a material breach 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, a material breach of the Multi-Unit Development Agreement occurs if the Multi-Unit Developer negotiates changes with a purchaser without re-offering the sale of Major Assets to Southern Steer under the new terms. This means that if Southern Steer declines to purchase the Major Assets under the initial offer, and the developer then modifies the terms during negotiations with another potential buyer, the developer is obligated to present these revised terms to Southern Steer for reconsideration.
Specifically, if the Multi-Unit Developer agrees to negotiate, change, delete, or modify any terms and conditions from the original offer or the most recent version of the definitive agreement that Southern Steer found unacceptable, the developer must re-offer the Major Assets to Southern Steer under these new terms. Failure to do so constitutes a material breach of the agreement. This provision ensures that Southern Steer retains the right of first refusal even when the terms of sale evolve during negotiations with other parties.
This requirement protects Southern Steer's interests by ensuring they have the opportunity to match any improved terms offered to a third-party purchaser. For a prospective franchisee, this means that when selling Major Assets, strict adherence to the process of offering and re-offering terms to Southern Steer is crucial to avoid breaching the Multi-Unit Development Agreement. It also highlights the importance of clear communication and documentation during any sale negotiations.