factual

Is engaging in competitive activity a cause for immediate termination of the Southern Steer franchise agreement?

Southern_Steer Franchise · 2025 FDD

Answer from 2025 FDD Document

e, contractor or consultant or in any other capacity of any entity, business or person that engages in the activities described in Sections 16.2(a)(i) or (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 16.216.2(a)(i) or (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.
  • (b) In-Term Covenant Not to Compete. Franchisee acknowledges that Franchisor will be unable to protect the System, Confidential Information, Trade Secrets, Brand Manual, Franchisor's proprietary materials and other confidential and proprietary elements of the Southern Steer Business and achieve an exchange of ideas with Franchisee if Franchisee or those persons referenced in Section16.3 were permitted to hold competitive interests or engage in Competitive Activities. Therefore, during the Initial Term and any Interim Period, Franchisee and those persons referred to in Section 16.3 agree not to, directly or indirectly, engage in Competitive Activities anywhere other than as expressly authorized in writing by Franchisor. Franchise acknowledges that a violation of this Section 16.2(b) would constitute an unfair method of competition and would hinder Franchisee's ability to devote sufficient time to the Southern Steer Business.
  • (c) Post Term Covenant Not to Compete. For a period of 24 months after the later of (1) the termination, transfer, assignment or expiration of this Agreement;

Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)

What This Means (2025 FDD)

According to Southern Steer's 2025 Franchise Disclosure Document, franchisees are prohibited from engaging in competitive activities during the term of the franchise agreement. Specifically, Section 16.2(b) states that engaging in competitive activities would be considered an unfair method of competition and would hinder the franchisee's ability to devote sufficient time to the Southern Steer business.

Furthermore, Section 16.3 outlines post-term covenants not to compete, restricting franchisees from engaging in any Competitive Activity within a defined area for a period of 24 months after termination, transfer, assignment, or expiration of the agreement. This restricted area includes the franchised location, the protected area, and areas within 50 miles of the protected area, the franchised location, or any other Southern Steer business.

The franchise agreement specifies that violating the in-term covenant not to compete would constitute an unfair method of competition. While the document outlines the restrictions on competitive activities during and after the franchise term, it does not explicitly state that engaging in competitive activity is a cause for immediate termination. A prospective franchisee should consult the full franchise agreement and discuss termination conditions with the franchisor to fully understand the circumstances that could lead to immediate termination.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.