Does the Southern Steer franchise agreement state that the limitations in the covenant not to compete are necessary to protect the Franchisor's Confidential Information and Trade Secrets?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ii) The Franchisee, each Owner, and the Recipients agree that the limitations of time, geography, and scope of the prohibited activity are reasonable because, among other things, (i) Franchisor is engaged in a highly competitive industry, (ii) Franchisee, and each Owner, and the Recipients will have access to the Confidential Information and Trade Secrets, including Franchisor's confidential and proprietary Brand Manual, (iii) these limitations are necessary to protect Franchisor's Confidential Information, Trade Secrets, goodwill and the goodwill of its other franchisees and developers, (iv) that this covenant not to compete is necessary to give the Franchisor the opportunity to resell and/or develop a new Southern Steer Business at or in the area near the Franchised Location, and (v) 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 this Agreement.
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 explicitly states that the limitations within the covenant not to compete are necessary to protect Southern Steer's confidential information and trade secrets. The agreement emphasizes that franchisees, owners, and recipients of confidential information acknowledge that the restrictions on time, geography, and scope are reasonable. This is due to the highly competitive nature of the industry, the franchisee's access to confidential information including the Brand Manual, and the need to protect Southern Steer's trade secrets and goodwill.
The agreement specifies that these limitations are essential to allow Southern Steer the opportunity to resell or develop a new business in the vicinity of the franchised location. Furthermore, it is acknowledged that franchisees, owners, and recipients can still engage in lawful trade and business without violating the terms of the agreement. This balance ensures that Southern Steer's business interests are protected while allowing franchisees to pursue other opportunities.
The franchise agreement also states that monetary damages may not be sufficient to compensate Southern Steer for a breach of the agreement. Injunctive relief is deemed essential to protect Southern Steer, its franchisees, and developers. This highlights the importance Southern Steer places on safeguarding its confidential information and trade secrets, and the measures it is willing to take to prevent unauthorized use or disclosure.