Does the Designated Manager of a Southern Steer Business need to own an equity interest?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM. 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS
You, Your Operating Principal (if You are a corporation, limited liability company, partnership, or other entity) or Your Designated Manager must, personally participate in the dayto-day management of Your Southern Steer Business. Your Designated Manager need not own an equity interest in the Southern Steer Business; however, your Operating Principal will own an equity interest. The Designated Manager must be approved by Us. We also recommend that You hire an assistant manager to assist in the day-to-day management of Your Southern Steer Business.
Source: Item 15 — ITEM. 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 41–42)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the Designated Manager is not required to have an ownership equity interest in the Southern Steer franchise. However, the Operating Principal, who is designated when the Franchise Agreement is signed, must own and control, or have the right to own and control, at least 51% of the ownership equity in the franchise. The Operating Principal must also have the authority to make all operational decisions for the Southern Steer Business.
The Designated Manager must be approved by Southern Steer and must devote their full time and best efforts to the supervision, conduct, and day-to-day operations of the Southern Steer Business. The Designated Manager is required to execute the Non-Competition and Non-Disclosure Agreement. If the Designated Manager is unable to continue serving in that capacity, the franchisee must notify Southern Steer and designate a qualified replacement within 30 days. The replacement Designated Manager must complete the Initial Training Program and execute the Non-Competition and Non-Disclosure Agreement.
While the Designated Manager does not need to have equity, they play a crucial role in the daily operations. The distinction between the Operating Principal and Designated Manager allows for flexibility in the franchise's management structure. A prospective franchisee could hire a manager without offering equity, while still maintaining the Operating Principal's control with at least 51% ownership. This structure is not uncommon in franchising, where operational management can be delegated while ownership and overall control remain with the franchisee.