Is the grant of development rights in the Multi-Unit Development Agreement for Southern Steer exclusive?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- Non-Exclusive.
The Franchisee acknowledges that the rights granted in this Agreement are non-exclusive.
However, so long as Franchisee is not in default of this Agreement, the Franchise Agreement for Multi-Unit Developer's first Southern Steer Business ("Initial Franchise Agreement") or any other agreement between Multi-Unit Developer and Franchisor, Franchisor will not operate or license a third party to operate a Southern Steer Business in the Development Territory for the First Period set out in the Development Schedule attached hereto as Attachment A.
Upon expiration of the First Period, Franchisor has the right to operate and license third parties to operate Southern Steer Businesses in the Development Territory.
- Reservation of Rights.
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 rights granted to a Multi-Unit Developer are non-exclusive. However, Southern Steer agrees not to operate or license a third party to operate a Southern Steer Business in the Development Territory for a specified 'First Period,' as outlined in the Development Schedule, as long as the Multi-Unit Developer is not in default of the agreement or any other agreement with Southern Steer. Upon the expiration of this 'First Period,' Southern Steer reserves the right to operate or license others to operate Southern Steer Businesses within the Development Territory.
Even during the 'First Period,' Southern Steer retains significant rights. Southern Steer and its affiliates have the right to use and license the Southern Steer system for businesses inside or outside the Development Area, regardless of proximity. They can also sell products and services under different names and through alternative channels of distribution. Additionally, Southern Steer can offer and sell other business products and services, and acquire or be acquired by businesses similar to Southern Steer, even within the Development Territory.
This arrangement means that while a Multi-Unit Developer gets a period of reduced competition from Southern Steer itself, the exclusivity is limited and temporary. The franchisee needs to be aware that Southern Steer can eventually compete directly or license others to compete in the same territory. The franchisee should carefully consider the length of the 'First Period' and the potential impact of future competition from Southern Steer or its licensees when evaluating the multi-unit development opportunity.