For the first Southern Steer Business, how is the Initial Franchise Fee paid by the Multi-Unit Developer?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
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Initial Franchise Fees and Corresponding Franchise Agreements.
- (a) First Southern Steer Business. Upon executing this Agreement, the Multi-Unit Developer must execute the Initial Franchise Agreement for its first Southern Steer Business that the Multi-Unit Developer is required to open and operate under this Agreement ("First Southern Steer Business"). The portion of the Development Fee paid in accordance with Section 4.1(a) will be applied as the Initial Franchise Fee set out in the Initial Franchise Agreement at the time the Initial Franchise Agreement is executed by the Multi-Unit D
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 Multi-Unit Developer pays the Initial Franchise Fee for the first Southern Steer Business by applying a portion of the Development Fee. Specifically, the portion of the Development Fee paid according to Section 4.1(a) of the Multi-Unit Development Agreement will be applied as the Initial Franchise Fee. No additional Initial Franchise Fee will be due at the time the Initial Franchise Agreement is executed by the Multi-Unit Developer.
This means that instead of paying a separate Initial Franchise Fee for the first location, the amount is covered by the initial Development Fee paid for the rights to develop multiple units. This is a common practice in multi-unit franchising, where the upfront fee is structured to cover the initial franchise fee for the first unit.
It is important for prospective multi-unit developers to understand the terms of both the Multi-Unit Development Agreement and the individual Franchise Agreements, as the specific amounts and conditions can vary. The FDD also states that payment of the initial franchise fee and development fee will be deferred until Southern Steer has satisfied their pre-opening obligations, and the franchisee has commenced business operations.