In the event of wrongful termination of the Southern Steer Multi-Unit Development Agreement, are the parties relieved of their obligations?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Any Transfer of the Multi-Unit Developer's Southern Steer Businesses that does not include a Transfer of this Agreement to the transferee will constitute a wrongful termination of this Agreement by the Multi-Unit Developer.
- Obligations Upon Termination or Expiration.
If this Agreement is terminated by the Franchisor in accordance with this Section 8, the rights and duties of the Franchisor and the Multi-Unit Developer will be as follows:
(a) the Multi-Unit Developer will have no rights to open additional Southern Steer Businesses within the Development Territory;
(b) the Multi-Unit Developer and Controlled Entity (if any) will continue to pay all required Fees and to operate its Southern Steer Business opened in the Development Territory pursuant to the terms of the applicable Franchise Agreements signed by the Multi-Unit Developer or Controlled Entity (if any) prior to the date of the termination of this Agreement, and will in all other respects continue to comply with such Franchise Agreements;
(c) the Franchisor will have the absolute right to develop Southern Steer Businesses in the Development Territory or to contract with other persons for the development of additional Southern Steer Businesses in the Development Territory;
(d) the Multi-Unit Developer will have no right to obtain a refund of any monies it paid to the Franchisor pursuant to this Agreement or the Franchise Agreements;
(e) the indemnities and covenants contained in this Agreement will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement; and
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, a transfer of the Multi-Unit Developer's Southern Steer Businesses that does not include a transfer of the Multi-Unit Development Agreement to the transferee will constitute a wrongful termination of the agreement by the Multi-Unit Developer.
Even in the event of termination, certain obligations continue. If Southern Steer terminates the Multi-Unit Development Agreement, the developer has no further rights to open additional Southern Steer businesses in the development territory. However, the developer must continue to pay all required fees and operate existing Southern Steer businesses according to their franchise agreements. Southern Steer retains the right to develop additional businesses in the territory. The developer is not entitled to a refund of any payments made to Southern Steer, and all indemnities and covenants within the agreement remain in effect.
These stipulations are typical in franchise agreements to protect the franchisor's brand and system. The continuation of certain obligations ensures that both parties remain accountable even after the agreement ends, preventing franchisees from abandoning their responsibilities while allowing the franchisor to maintain control over future development in the territory.