Is the Franchisor obligated to operate the Southern Steer business if the Franchisee is unable to?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
In order to prevent any interruption of the Southern Steer Business which would cause harm to the Southern Steer Business, if Franchisee, the Operating Principal or Owner(s) are unable or fail to operate Franchisee's Southern Steer Business for a period of 45 days or longer for any reason whatsoever (except as provided in Section18.2, in which case the period is 15 days) Franchisee authorize Franchisor to appoint an interim manager to operate Franchisee's Southern Steer Business for so long as Franchisor deems necessary and practical.
In the event that Franchisor appoints an interim manager, during the time period such interim manager operates the Franchisee's Southern Steer Business, all revenue from the operation of Franchisee's Southern Steer Business will be kept in a separate account and the expenses of Franchisee's Southern Steer Business, including reasonable compensation and expenses of Franchisor and its agents will be charged to the account.
Additionally, Franchisor will retain 50% of Gross Revenues for Franchisee's Southern Steer Business' as a management fee.
Nothing contained herein will be construed to require Franchisor to operate Franchisee's Southern Steer Business in the case of Franchisee's inability to operate same, and the rights set forth herein may be exercised in the sole and absolute discretion of Franchisor.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the franchisor is not required to operate the franchisee's Southern Steer business if the franchisee is unable to do so. However, if the franchisee, operating principal, or owners are unable or fail to operate the Southern Steer business for 45 days or longer for any reason, Southern Steer is authorized to appoint an interim manager to operate the business. If the reason for the inability to operate is due to Section 18.2, the period is 15 days. Southern Steer can appoint an interim manager for as long as they deem necessary and practical.
During the period an interim manager operates the Southern Steer business, all revenue will be kept in a separate account. The expenses of the Southern Steer business, including reasonable compensation and expenses for Southern Steer and its agents, will be charged to this account. Additionally, Southern Steer will retain 50% of the gross revenues as a management fee.
It's important to note that the decision to operate the franchisee's Southern Steer business in the case of the franchisee's inability to do so is at the sole and absolute discretion of Southern Steer. This means that while Southern Steer has the right to step in and manage the business, they are not obligated to do so. This clause protects Southern Steer from being forced to take on the responsibility of a struggling franchise, while also providing a mechanism to maintain the business's operation if they choose to exercise it.