What constitutes a wrongful termination of the Southern Steer Multi-Unit Development Agreement by the Multi-Unit Developer?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Any Transfer of the Multi-Unit Developer's Southern Steer Businesses that does not include a Transfer of this Agreement to the transferee will constitute a wrongful termination of this Agreement by the Multi-Unit Developer.
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 wrongful termination of the Multi-Unit Development Agreement by the Multi-Unit Developer occurs if the developer transfers their Southern Steer businesses without also transferring the Multi-Unit Development Agreement to the same party. This means that the rights and obligations to develop additional Southern Steer locations within the designated territory must be transferred along with the existing businesses.
This provision protects Southern Steer by ensuring that control over future development in a specific area remains with an approved entity. If a Multi-Unit Developer sells their existing stores to someone but retains the development rights, Southern Steer could face a situation where the new store owner is not aligned with their development strategy or brand standards. By requiring the development agreement to be transferred along with the stores, Southern Steer maintains control over who can expand the brand within that territory.
For a prospective Southern Steer Multi-Unit Developer, this clause highlights the importance of carefully planning any potential sale or transfer of their business interests. They must ensure that any sale includes the transfer of the development agreement and that the proposed transferee is acceptable to Southern Steer. Failure to do so could result in a breach of the agreement and potential legal ramifications. This also means that the Multi-Unit Developer cannot simply sell off the developed stores and retain the rights to develop future locations; the entire agreement must be transferred to the new party.
This requirement is fairly standard in multi-unit franchise agreements, as franchisors want to maintain control over the development of their brand and ensure that new franchisees meet their standards. It is crucial for potential Multi-Unit Developers to fully understand these transfer requirements and to seek legal counsel when considering any transfer of their business or development rights.