Can the Southern Steer franchise agreement be immediately terminated if the franchisee's owners engage in competitive activity?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
ities described in Sections 16.216.2(a)(i) or (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.
- (b) In-Term Covenant Not to Compete. Franchisee acknowledges that Franchisor will be unable to protect the System, Confidential Information, Trade Secrets, Brand Manual, Franchisor's proprietary materials and other confidential and proprietary elements of the Southern Steer Business and achieve an exchange of ideas with Franchisee if Franchisee or those persons referenced in Section16.3 were permitted to hold competitive interests or engage in Competitive Activities. Therefore, during the Initial Term and any Interim Period, Franchisee and those persons referred to in Section 16.3 agree not to, directly or indirectly, engage in Competitive Activities anywhere other than as expressly authorized in writing by Franchisor. Franchise acknowledges that a violation of this Section 16.2(b) would constitute an unfair method of competition and would hinder Franchisee's ability to devote sufficient time to the Southern Steer Business.
- (c) Post Term Covenant Not to Compete. For a period of 24 months after the later of (1) the termination, transfer, assignment or expiration of this Agreement;
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 if the franchisee or their owners engage in competitive activities during the term of the agreement. Southern Steer considers such actions an unfair method of competition that hinders the franchisee's ability to focus on their Southern Steer business.
The FDD states that during the Initial Term and any Interim Period, the franchisee and related parties agree not to directly or indirectly engage in Competitive Activities unless expressly authorized in writing by Southern Steer. This restriction is in place to protect Southern Steer's system, confidential information, trade secrets, brand manual, proprietary materials, and other confidential elements of the Southern Steer business.
After the termination, transfer, assignment, or expiration of the agreement, a post-term covenant not to compete restricts the franchisee and related parties from engaging in any Competitive Activity for 24 months. This restriction applies to the franchised location, the protected area, and within 50 miles of the outer boundaries of the protected area, the franchised location, or any other Southern Steer business. This ensures that former franchisees do not directly compete with Southern Steer within a reasonable timeframe and geographic area after their franchise agreement ends.