Does the Southern Steer franchise agreement state that the covenant not to compete is necessary to protect the integrity of the Southern Steer franchise system?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisee, each Owner, and the Recipients further agree that these provisions are necessary to protect the legitimate business interests of the Franchisor, including protecting the integrity of the System and preventing duplication of the System by unauthorized third parties.
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 franchise agreement includes acknowledgements related to the covenant not to compete. Specifically, the franchisee, each owner, and the recipients agree that the limitations of time, geography, and scope of the prohibited activity are reasonable for several reasons, including the highly competitive industry and access to confidential information and trade secrets. These limitations are deemed necessary to protect Southern Steer's confidential information, trade secrets, goodwill, and the goodwill of its other franchisees and developers.
The agreement explicitly states that the covenant not to compete is necessary to give Southern Steer the opportunity to resell and/or develop a new Southern Steer Business at or in the area near the franchised location. Furthermore, it acknowledges that the franchisee, each owner, and the recipients are able to engage in lawful trade and business in a suitable and satisfactory manner without violating the terms of the agreement.
The franchisee, each owner, and the recipients further agree that these provisions are necessary to protect the legitimate business interests of Southern Steer, including protecting the integrity of the System and preventing duplication of the System by unauthorized third parties. This highlights the importance Southern Steer places on maintaining the uniqueness and exclusivity of its franchise system. Additionally, the agreement emphasizes that money damages alone may not adequately compensate Southern Steer if there is a breach, and injunctive relief is essential for the protection of Southern Steer and its franchisees and developers.