Does the definition of 'Competitive Activity' for a Southern Steer franchise include assisting another business to conduct activities similar to a Southern Steer Business?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) "Competitive Activity" means (i) offering products and services that are the same as, similar to or competitive with a Southern Steer Business; (ii) operating a business or selling goods or providing services that features butcher, specialty grocer, marinated meats, or food preparation classes or that employs or incorporates one or more distinctive elements of the System; (iii) providing services of the type provided by Franchisor and/or its Affiliates where those services are provided in relation to businesses of the type described in Sections (i)-(ii); (iv) Ownership, whether directly or indirectly, and whether beneficially or of record of any capital stock, partnership interest, membership interest or any other interest in a business or entity that engages in the activities described in Sections (i) - (ii); (v) participation, either directly or indirectly, in the management or operation of a business as a partner, investor, shareholder, owner, director, officer, employee, principal, agent, advisor, manager, franchisee, licensee, contractor or consultant or in any other capacity of any entity, business or person that engages in the activities described in Sections (i) - (ii); (vi) Franchise, license, conduct or be connected with or assist any person, entity or business to franchise, license, conduct or be connected with the activities described in Sections (i) - (ii); and (vii) divert or attempt to divert, directly or indirectly, any business related to, or any customer or account of, Franchisee's Southern Steer Business, Franchisor, Affiliates, any Other Business operated by Franchisor its franchisees, licensees or Affiliates, or any other business then being offered or operated by Franchisor or its Affiliate(s) in the Protected Area.
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, the definition of 'Competitive Activity' does include assisting another business to conduct activities similar to a Southern Steer business. Specifically, it includes assisting any person, entity, or business to franchise, license, conduct, or be connected with activities that are the same as, similar to, or competitive with a Southern Steer Business. This definition applies both during the term of the franchise agreement and for a period of time after the agreement terminates.
This non-compete clause has significant implications for a prospective Southern Steer franchisee. During the term of the franchise, franchisees are prohibited from being involved in any capacity with a business that competes with Southern Steer, even as an employee or consultant. After the franchise agreement ends, this restriction continues for 24 months within a specified geographic area. This area includes the franchised location, the protected area, and within 50 miles of the protected area's outer boundaries, the franchised location, or any other Southern Steer Business.
The broad scope of the 'Competitive Activity' definition means that franchisees must be very careful about any business ventures they pursue, both during and after the franchise term. Even seemingly minor involvement in a competing business could be considered a breach of the franchise agreement, potentially leading to legal action from Southern Steer. The FDD also states that money damages may not adequately compensate Southern Steer and that injunctive relief may be essential to protect Southern Steer and its franchisees and developers.
It is important for potential franchisees to fully understand these restrictions and how they might impact their future business opportunities. Seeking legal counsel to review the franchise agreement and non-compete clauses is advisable to ensure a clear understanding of the obligations and limitations.