What is the Southern Steer franchisee required to do regarding ownership interests in the franchisee?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Ownership Interests owned by the Franchisee or by the Owners of the Franchisee may not be Transferred by the Franchisee or the Owners until the Ownership Interests have first been offered to the Franchisor in writing.
If the Franchisee or the Owners desire to Transfer their Ownership Interests, then they will first offer the Ownership Interests in the Franchisee to the Franchisor in writing under the same terms and conditions as those being offered to any party.
If the Franchisee or the Owners desire to Transfer their Ownership Interests, then they will first offer the Ownership Interests in the Franchisee to the Franchisor in writing under the same terms and conditions as those being offered to any party.
The Franchisor will have 30 days to accept any offer to purchase the Owner's Ownership Interest in the Franchisee.
The Owner will be required to comply with the provisions of Section 18.6 if the Franchisor does not exercise its right to purchase the Owner's Ownership Interest.
- 18.6.
Transfer of Ownership Interest in the Franchisee.
No Owner will have the right to Transfer an Ownership Interest in the Franchisee without the prior written approval of the Franchisor.
The Franchisor will not withhold its written consent if the Transfer of the Ownership Interest complies in all respects with the terms of this Agreement, and if the Franchisor does not exercise its right of first refusal to acquire the Owner's Ownership Interest in the Franchisee pursuant to Section 19.
A Transfer by an Owner of the Franchisee to (a) a relative (husband, wife, children, grandchildren, mother, father, brothers and sisters) of the Owner, (b) one of the existing Owners of the Franchisee, or (c) to an Entity owned 100% by Franchisee will not require to pay a Transfer Fee.
Franchisee will furnish to Franchisor, at any time and from time to time upon request in such form as Franchisor may require, a list of all Owners of Franchisee and their respective ownership interest.
- 18.7.
Prohibition on Transfer to Competitor by the Franchisee and Owners.
The Franchisee and the Owners will not Transfer this Agreement or their Ownership Interests in the Franchisee, the Franchise Agreement or the Southern Steer Business to any person or Entity that owns, operates, franchises, develops, consults with, manages, is involved in, or controls any Competitive Business.
If the Franchisor refuses to permit a Transfer of this Agreement under this provision, then the only remedy of the Franchisee and the Owners will be to have an arbitrator determine whether the proposed transferee owns or operates a Competitive Business.
The Franchisee acknowledges and agrees that the Franchisee will be solely responsible for all costs and fees charged by such arbitrator.
(h) If any person or entity ceases to be one of the Franchisee's Owners, or if any individual or entity becomes an Owner of the Franchisee, then the Franchisee will notify the Franchisor in writing and within five business days the Franchisee will require the new Owner to execute all documents then required by the Franchisor;
(i) The Franchisee's Organizational Documents and any documents representing Ownership in the Franchisee will provide that no Ownership Interest in the Franchisee may be assigned or transferred to any person or entity unless it is in strict compliance with the terms, conditions and restrictions contained in this Agreement;
(j) Each of the Franchisee's Owners will execute the Personal Guaranty attached hereto as Attachment C and the Non-competition and Non-Disclosure Agreement attached hereto as Attachment I-1; and
(f) Guaranty.
If Franchisee is a corporation, partnership, limited liability company, or other entity, or in the future become a corporation, partnership, limited liability company, or other entity, Franchisor will require Franchisee's officers, directors, shareholders, partners, members, managers, owners, and owner's spouses or domestic partners to sign the Personal Guaranty attached hereto as Attachment C.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, a franchisee faces several requirements regarding ownership interests. The franchisee must first offer their ownership interests to Southern Steer in writing, presenting the same terms and conditions offered to any other party. Southern Steer then has 30 days to accept the offer to purchase the ownership interest. If Southern Steer declines to exercise its right to purchase the ownership interest, the owner must still comply with the provisions outlined in Section 18.6 of the agreement.
Furthermore, no owner can transfer an ownership interest in the Southern Steer franchise without prior written approval from Southern Steer. However, Southern Steer will not withhold consent if the transfer complies with the agreement's terms and Southern Steer does not exercise its right of first refusal. Transferring ownership to specific relatives (spouse, children, parents, siblings, grandchildren), existing owners, or an entity wholly owned by the franchisee does not require a transfer fee. The franchisee must also provide Southern Steer with a list of all owners and their respective ownership interests upon request.
The franchisee and owners are prohibited from transferring the agreement or their ownership interests to any entity involved with a competitive business. If Southern Steer refuses a transfer based on this provision, the franchisee's only recourse is to have an arbitrator determine whether the proposed transferee owns or operates a competitive business, with the franchisee responsible for all arbitration costs. The franchisee must notify Southern Steer in writing if any person ceases to be an owner or if a new owner joins the franchise, and ensure the new owner executes all required documents within five business days.
Southern Steer also requires that the franchisee's organizational documents state that no ownership interest can be assigned or transferred unless it strictly complies with the franchise agreement. Each owner must execute a Personal Guaranty and a Non-competition and Non-Disclosure Agreement. Additionally, if the franchisee is a corporation, partnership, limited liability company, or other entity, Southern Steer will require the officers, directors, shareholders, partners, members, managers, owners, and owner's spouses or domestic partners to sign the Personal Guaranty.