Can the franchisee change the terms of the lease without Southern Steer's approval?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Purchase or Lease of Site.
The Franchisee will provide the Franchisor with a copy of the proposed Lease for the site of the Franchised Location selected by the Franchisee at least 30 days before the date the Lease is to be signed.
The Franchisor may, but is not required, to assist the Franchisee in negotiating the terms of the Lease.
The Franchisor's review of the Lease will be only to determine whether the terms of the Lease comply with the terms and conditions of this Agreement, and not to provide any business, economic, legal or real estate advice or analysis.
The Franchisee will be solely responsible for all terms of the Lease, including the enforceability, economics and legality of all provisions in the Lease.
The enforceability of the Lease must be conditioned on Franchisor approving the Franchisee as a Southern Steer Franchisee and the enforceability of this Agreement.
The Franchisee will not sign the Lease until (a) this Agreement has been signed by both the Franchisee and the Franchisor; and (b) the Lease contains the terms required under this Section and the terms set forth in the Form of Lease Addendum attached to this Agreement as Attachment F.
The Franchisee will use its best efforts to negotiate and secure from the lessor of the Franchised Location the terms and conditions set forth herein and in the Form of Lease Addendum attached hereto.
In addition, the terms of the Lease must also give the Franchisor the right to enter the premises of the Franchised Location to conduct inspections during regular business hours.
Further, the Franchisee must execute a Collateral Assignment of Lease attached to this Agreement as Attachment F-1, whereby the Franchisee agrees to assign the Franchisee's rights in the Lease to the Franchisor in the event of a termination or expiration of the term of this Agreement or a default under the Lease.
The Franchisee will provide executed copies of the Lease or purchase closing documents for the Franchised Location within 10 days after their execution.
Franchisee will be required to execute a lease that complies with this Section within 90 days after the Effective Date.
- 5.4.
Site Release.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, franchisees cannot sign a lease until the Franchise Agreement has been signed by both parties and the lease contains the terms required. The franchisee must provide Southern Steer with a copy of the proposed lease for the site selected for the Franchised Location at least 30 days before signing the lease. Southern Steer may assist the franchisee in negotiating the terms of the lease, but is not required to do so. Southern Steer's review of the lease is to determine whether the terms comply with the Franchise Agreement, and not to provide business, economic, legal, or real estate advice. The franchisee is solely responsible for all terms of the lease, including the enforceability, economics, and legality of all provisions.
The enforceability of the lease must be conditioned on Southern Steer approving the franchisee and the enforceability of the Franchise Agreement. The franchisee must use its best efforts to negotiate and secure specific terms and conditions from the lessor, as outlined in the Form of Lease Addendum attached to the agreement. The lease terms must grant Southern Steer the right to enter the premises for inspections during regular business hours. Additionally, the franchisee must execute a Collateral Assignment of Lease, assigning the franchisee's rights in the lease to Southern Steer in the event of termination or expiration of the agreement, or a default under the lease. Executed copies of the lease or purchase closing documents must be provided to Southern Steer within 10 days after their execution.
In practical terms, a prospective Southern Steer franchisee has limited flexibility in altering the lease terms without Southern Steer's consent. The initial lease agreement is subject to review and must align with the Franchise Agreement. Furthermore, the franchisee is obligated to assign the lease to Southern Steer under certain conditions, indicating that Southern Steer maintains a vested interest in the lease terms throughout the duration of the franchise agreement. This ensures that Southern Steer has some control over the location of its franchises and can maintain brand consistency.