Is diverting customers from a Southern Steer Business considered a 'Competitive Activity'?
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 Southern Steer's 2025 Franchise Disclosure Document, diverting customers from a Southern Steer business is considered a 'Competitive Activity.' The FDD defines 'Competitive Activity' to include actions that could take business away from the franchisee's Southern Steer business, the franchisor, its affiliates, or any other business within the Southern Steer system. This encompasses any attempt to redirect business or customers away from the Southern Steer network.
This definition has significant implications for franchisees. It means that during the term of their franchise agreement, and for a specified period afterward, franchisees are prohibited from engaging in any activity that could potentially draw customers away from the Southern Steer system. This restriction is in place to protect the brand's market share, customer base, and overall goodwill.
The non-compete obligations extend not only to the franchisee but also to their owners and recipients, ensuring a comprehensive approach to preventing competitive activities. The FDD also states that Southern Steer can seek injunctive relief, meaning a court order to stop the competitive activity, in addition to monetary damages if a franchisee breaches this covenant. This highlights the seriousness with which Southern Steer views these restrictions and their commitment to protecting the brand and its franchisees from unfair competition.