Can the Southern Steer franchise agreement be immediately terminated if the franchisee's designated manager is convicted of a crime?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisee will be deemed to be in Default subject to immediate termination of this Agreement and the rights granted herein or the exercise of any other remedies in accordance with Sections 20.4 and 20.5, without prior notice of the default from the Franchisor and without an opportunity to cure the Default unless precluded by applicable law or otherwise as stated herein, if any of the following events occur:
- (a) the Franchisee, Owners, Operating Principal or the Designated Manager(s) are convicted of, or plead guilty to a charge of violating any law relating to the Franchisee's Southern Steer Business or that adversely affects the operation, maintenance, reputation, or goodwill of the Southern Steer Business, System, the Marks or the Franchisor;
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the franchise agreement can be subject to immediate termination without prior notice or an opportunity to cure the default if the Designated Manager is convicted of a crime. This is contingent on the crime violating any law relating to the Southern Steer Business or adversely affecting its operation, maintenance, reputation, or goodwill.
This provision means that Southern Steer franchisees must carefully vet and monitor their designated managers. A criminal conviction of the designated manager, even if seemingly unrelated to the business, could trigger the immediate termination of the franchise agreement if it reflects poorly on the Southern Steer brand.
This type of clause is relatively common in franchise agreements, as franchisors need to protect their brand's reputation. However, the specific scope—whether any crime triggers termination or only those directly related to the business—can vary. Prospective franchisees should understand these terms and assess the risk they pose.
It is important to note that the termination is subject to the franchisor exercising its remedies according to specified sections of the agreement. The franchisee may have limited recourse to prevent termination if the conditions are met, emphasizing the importance of compliance and careful management of personnel.