Is a Southern Steer franchisee allowed to divert business away from other Southern Steer franchisees?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
e, contractor or consultant or in any other capacity of any entity, business or person that engages in the activities described in Sections 16.2(a)(i) or (ii);
- vi. Franchise, license, conduct or be connected with or assist any person, entity or business to franchise, license, conduct or be connected with the activities 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 FDD, Southern Steer franchisees are explicitly prohibited from diverting business away from other franchisees, the franchisor, or affiliated businesses. The franchise agreement states that a franchisee cannot divert or attempt to divert business related to their Southern Steer Business, the 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. This restriction is part of the in-term covenant not to compete, highlighting the importance Southern Steer places on protecting its system, confidential information, and brand integrity.
This restriction extends beyond just other franchisees; it includes the franchisor's own businesses and affiliates, ensuring a comprehensive protection against business diversion. This clause aims to prevent franchisees from unfairly capitalizing on the Southern Steer brand and customer base to the detriment of the overall network. The FDD specifies that violating this section would be considered an unfair method of competition, further emphasizing the seriousness of such actions.
After the termination or expiration of the franchise agreement, a similar restriction applies for a period of 24 months. During this post-term period, the franchisee is prohibited 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. This non-compete agreement ensures that former franchisees do not directly compete with existing Southern Steer locations for a reasonable period after leaving the system.