For a Southern Steer franchise, what are the consequences of operating a Competitive Business?
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 the 2025 Southern Steer Franchise Disclosure Document, franchisees face significant restrictions on engaging in competitive activities, both during the term of their franchise agreement and for a period after termination. During the Initial Term and any Interim Period, a franchisee is prohibited from engaging in Competitive Activities anywhere other than as expressly authorized in writing by Southern Steer. Southern Steer emphasizes that allowing franchisees to hold competitive interests would hinder their ability to protect the Southern Steer system, confidential information, trade secrets, brand manual, proprietary materials, and other confidential elements of the Southern Steer Business. Southern Steer considers a violation of this covenant as an unfair method of competition that would impair the franchisee's ability to dedicate sufficient time to the Southern Steer Business.
Post-termination, the restrictions continue for 24 months after the termination, transfer, assignment, or expiration of the agreement, or after a final order enforcing the covenant. During this period, franchisees and related parties are barred from engaging in any Competitive Activity within the Franchised Location, the Protected Area, within 50 miles of the outer boundaries of the Protected Area, within 50 miles from the Franchised Location, or within 50 miles of any other Southern Steer Business.
These non-compete clauses are standard in franchising to protect the brand and prevent franchisees from using the franchisor's knowledge to directly compete. Prospective Southern Steer franchisees should carefully consider the scope and duration of these restrictions, as they could significantly limit their business opportunities after leaving the Southern Steer system. Franchisees should seek legal counsel to fully understand the implications of these covenants not to compete.