Can the Southern Steer franchise agreement be immediately terminated if the franchisee's Operating Principal 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 if the Operating Principal is convicted of a crime that adversely affects the Southern Steer business. This is considered a default of the agreement, and Southern Steer has the right to exercise remedies accordingly.
This provision means that a franchisee's investment in a Southern Steer franchise is highly dependent on the legal and ethical conduct of the Operating Principal. A criminal conviction, even if seemingly unrelated to the business, could trigger the immediate loss of the franchise. The franchisee would not be given an opportunity to correct the issue.
It is important for prospective Southern Steer franchisees to understand the full scope of what constitutes a violation that could lead to immediate termination. Franchisees should seek legal counsel to fully understand the implications of this clause and to ensure that their Operating Principal maintains a clean legal record to protect their investment. This type of clause is not uncommon in franchise agreements, as franchisors seek to protect their brand's reputation and goodwill.