What is the duration of the post-term covenant not to compete for a Southern Steer franchise, and from what event is it measured?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Post-Term Covenant Not to Compete. For a period of 24 months after the later of (i) the termination, transfer, assignment or expiration of this Agreement; or (ii) the entry of a final order by an arbitrator or a court of competent jurisdiction enforcing this covenant, neither the Franchisee, the Owners, or the Recipients will, on their own account or as an employee, principal, agent, franchisee, independent contractor, consultant, affiliate, licensee, partner, officer, director, shareholder, member, manager, or owner of any other person or Entity, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or Entity engaged in any Competitive Business or Competitive Activity within:
- (i) the Franchised Location;
- (ii) the Protected Area;
- (iii) within 50 miles of the outer boundaries of the Protected Area;
- (iv) within 50 miles from the Franchised Location;
- (v) within 50 miles of any other Southern Steer Business, or (vi) within any Protected Area or territory granted by the Franchisor pursuant to a Multi-Unit Development Agreement, franchise agreement, license agreement or other territorial 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 Southern Steer's 2025 Franchise Disclosure Document, the post-term covenant not to compete lasts for 24 months. This period begins after the later of two events: either the termination, transfer, assignment, or expiration of the Franchise Agreement, or the entry of a final order by an arbitrator or a court enforcing this covenant.
This means that after a Southern Steer franchise agreement ends, the franchisee, owners, or recipients are restricted from engaging in any Competitive Business or Competitive Activity. This restriction applies for two years, providing Southern Steer with protection against former franchisees using their knowledge and experience to compete against the brand. The start date is determined by whichever event occurs later, either the end of the agreement or a legal order enforcing the covenant, which could extend the non-compete period if legal action is required.
The non-compete restrictions apply to several specific geographic areas. These include the franchised location itself, the protected area granted to the franchisee, and areas within 50 miles of the outer boundaries of the protected area, the franchised location, or any other Southern Steer Business. It also extends to any protected area or territory granted by Southern Steer under a Multi-Unit Development Agreement or other territorial agreement.
These restrictions are designed to protect Southern Steer's market presence and prevent former franchisees from directly competing in areas where Southern Steer has a business interest. Prospective franchisees should carefully consider these limitations, as they could significantly impact their ability to operate a similar business after leaving the Southern Steer system.