Can the Franchisor use the Southern Steer System for businesses outside the Development Area?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding Section 2.2, the Franchisor and its Affiliates will have the absolute right to:
(a) Subject to the terms and conditions of the Franchise Agreements between Franchisor and Multi-Unit Agreement regarding the Protected Area defined therein, to use, and license the use of, the System or component(s) thereof, for the operation of Southern Steer Businesses inside or outside the Development Area, regardless of proximity to the Development Area;
(b) To offer and sell any products and services sold at Southern Steer Businesses under any other names and marks, including through alternative channels of distribution anywhere;
(c) To offer and sell, and/or license or franchise others to offer and sell, products and services for Other Businesses and market Other Businesses to anyone, including prospective and existing franchisees anywhere within or outside of the Development Territory;
(d) To acquire businesses that are the same as or similar to the Southern Steer Business and operate such businesses anywhere within or outside of the Development Territory and to be acquired by any third party which operates businesses that are the same as or similar to the Southern Steer Business anywhere within or outside of the Development Territory;
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the franchisor retains the right to use and license the Southern Steer system for businesses both inside and outside a franchisee's development area. This means that Southern Steer is not restricted from operating or licensing others to operate Southern Steer businesses, regardless of their proximity to a franchisee's designated territory. This applies as long as they adhere to the terms and conditions outlined in the Franchise Agreements regarding the Protected Area. This reservation of rights extends to using the system or its components for Southern Steer businesses, irrespective of location.
This aspect of the agreement has significant implications for franchisees. While a franchisee may have certain protections within their defined Development Territory, Southern Steer maintains the flexibility to expand its brand's presence beyond those boundaries. This could potentially lead to increased competition for the franchisee, especially if Southern Steer establishes locations near the Development Territory.
Furthermore, Southern Steer reserves the right to offer and sell products and services sold at Southern Steer Businesses under different names and marks through alternative distribution channels anywhere. They can also market other businesses to anyone, including existing franchisees, within or outside the Development Territory. Additionally, Southern Steer can acquire similar businesses and operate them anywhere, or be acquired by a third party operating similar businesses, without geographical restrictions.
In summary, while the Multi-Unit Developer secures the right to develop and operate Southern Steer Businesses within a Development Territory, the franchisor retains considerable freedom to operate and license the Southern Steer system outside of that area. Prospective franchisees should carefully consider this aspect of the agreement and its potential impact on their business before investing in a Southern Steer franchise.