Does the Southern Steer franchise agreement grant exclusive rights to the franchisee?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
nchised Location described in Attachment A. The rights granted to Franchisee by this Agreement are limited to the Protected Area and are subject to the reservation of rights described in Section 1.2(a).
- 1.2. Reservation of Rights. Franchisee acknowledges that the license granted hereunder, including in Section 1.1 is non-exclusive and, notwithstanding anything contained in this Agreement to the contrary, the following rights are reserved to Franchisor and its Affiliates and their successors and assigns:
- (a) Except as provided for in Section 1.4, to use, and license the use of, the System or component(s) thereof, for the operation of Southern Steer Businesses inside or outside Franchisee's Protected Area, regardless of proximity to the Protected Area and the Franchised Location;
- (b) To offer and sell any products and services sold at Southern Steer Businesses under any other names and marks, including through alternative channels of distribution;
- (c) To offer and sell, and/or license or franchise others to offer and sell, products and services for Other Businesses and market Other Businesses to anyone, including prospective and existing Franchisees anywhere within or outside of Franchisee's Protected Area;
- (d) To acquire businesses that are the same as or similar to the Southern Steer Business and operate such businesses anywhere within or outside of Franchisee's Protected Area and to be acquired by any third party which operates businesses that are the same as or similar to the Southern Steer Business anywhere within or outside of Franchisee Protected Area;
- (e) To market, distribute and sell, on a wholesale or retail basis, food products, prepackaged food, ancillary products and other goods, by direct sale, wholesale, the Internet, mail order, food truck, food trailer, third-party delivery services, other alternative distribution channels or by any other marketing or distribution method that may use the System under the Marks or other trademarks within or outside of Franchisee's Protected Area;
- (f) To implement multi-area marketing programs and delivery service programs which may allow Franchisor or others to solicit or sell to customers anywhere and Franchisor has the right to issue mandatory policies to coordinate such multi-area marketing programs and delivery service programs;
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the franchise agreement does not grant exclusive rights to the franchisee. Southern Steer retains significant rights, including the right to operate Southern Steer businesses inside or outside the franchisee's protected area, regardless of proximity. This means that Southern Steer can establish other franchises or corporate-owned stores, even in close proximity to a franchisee's location, except as provided for in Section 1.4. This section was not provided in the excerpt.
Southern Steer also reserves the right to sell products and services sold at Southern Steer Businesses under other names and marks through alternative distribution channels. They can offer and sell products and services for other businesses and market these to anyone, including existing franchisees, within or outside the franchisee's protected area. Additionally, Southern Steer can acquire similar businesses and operate them anywhere, even within a franchisee's protected area.
Furthermore, Southern Steer can market, distribute, and sell food products and other goods through various channels like direct sales, wholesale, the Internet, mail order, food trucks, third-party delivery services, or any other marketing method, within or outside the franchisee's protected area. They can also implement multi-area marketing and delivery service programs, potentially soliciting or selling to customers anywhere. Southern Steer also retains the right to operate Southern Steer Businesses from non-traditional locations anywhere.
These reservations of rights significantly impact a franchisee's potential market and competitive landscape. A prospective franchisee should carefully consider these non-exclusive terms and how they might affect their business's profitability and market share. It would be prudent to seek clarification from Southern Steer regarding the specifics of Section 1.4, which may provide some limited protection, and to understand the criteria for establishing other Southern Steer locations or alternative distribution channels near their franchised location.