For Southern Steer, what events trigger the start of the 24-month post-term covenant not to compete?
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 the 2025 Southern Steer Franchise Disclosure Document, the 24-month post-term covenant not to compete is triggered by the later of two events. These events are (1) the termination, transfer, assignment, or expiration of the Franchise Agreement, or (2) the entry of a final order by an arbitrator or a court of competent jurisdiction enforcing this covenant.
This means that after the franchise agreement ends, either through its natural expiration, a decision to transfer or assign it, or a termination (whether by the franchisee or Southern Steer), the franchisee is restricted from engaging in any Competitive Business or Competitive Activity for 24 months. The start of this 24-month period could also be triggered by a court or arbitrator's order enforcing the non-compete agreement, if that happens after the agreement's termination or expiration.
The non-compete restrictions apply to the franchisee, the owners, and the recipients (defined elsewhere in the FDD). These parties are restricted from involvement in any Competitive Business or Competitive Activity within the Franchised Location, the Protected Area, within 50 miles of the outer boundaries of the Protected Area, within 50 miles from the Franchised Location, within 50 miles of any other Southern Steer Business, or 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.
It is important for a prospective Southern Steer franchisee to understand these restrictions, as they significantly limit business activities after the franchise relationship concludes. Franchisees should carefully consider the geographic scope and duration of the non-compete agreement and how it might affect their future business opportunities.