Does the Southern Steer franchise agreement define 'Competitive Activity' in the context of the covenant not to compete?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) "Competitive Activity" means (i) offering products and services that are the same as, similar to or competitive with a Southern Steer Business; (ii) operating a business or selling goods or providing services that features butcher, specialty grocer, marinated meats, or food preparation classes or that employs or incorporates one or more distinctive elements of the System; (iii) providing services of the type provided by Franchisor and/or its Affiliates where those services are provided in relation to businesses of the type described in Sections (i)-(ii); (iv) Ownership, whether directly or indirectly, and whether beneficially or of record of any capital stock, partnership interest, membership interest or any other interest in a business or entity that engages in the activities described in Sections (i) - (ii); (v) participation, either directly or indirectly, in the management or operation of a business as a partner, investor, shareholder, owner, director, officer, employee, principal, agent, advisor, manager, franchisee, licensee, contractor or consultant or in any other capacity of any entity, business or person that engages in the activities described in Sections (i) - (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 (i) - (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.
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 term "Competitive Activity" is specifically defined within the franchise agreement. This definition is crucial because it outlines the scope of activities that a franchisee, their owners, and recipients are prohibited from engaging in during both the term of the franchise agreement and for a period of time after its termination or expiration. This restriction is designed to protect Southern Steer's business model, confidential information, and market position.
The definition of "Competitive Activity" is broad, encompassing various actions that could potentially harm Southern Steer's business. It includes offering similar products or services, operating a business with similar features (such as a butcher shop, specialty grocer, or food preparation classes), and any involvement in businesses that incorporate distinctive elements of the Southern Steer system. The definition extends to indirect participation, such as owning stock in a competing business or acting as a consultant for one. It also prohibits franchisees from diverting business away from their Southern Steer franchise or other Southern Steer businesses.
This comprehensive definition means that franchisees must be very careful about any business ventures they or their associates undertake, both during and after the franchise agreement. Engaging in activities that fall under this definition could lead to legal action by Southern Steer. Prospective franchisees should carefully review this definition and consider how it might impact their future business opportunities. It is advisable to seek legal counsel to fully understand the implications of this clause before signing the franchise agreement.