What happens if the transfer of the Southern Steer franchise results in a change of control?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Franchisee is an individual, this Agreement may be Transferred by the Franchisee to an Entity that is wholly owned by Franchisee without the payment of a Transfer Fee and without complying with Section 19 if the Franchisee is an individual or a general partnership, provided that the Owner or Owners of the Entity are the same person or persons who signed this Agreement and such Transfer will not result in a change in control of the Southern Steer Business, so long as the Franchisee provides the Franchisor with prior written notice of such Transfer and the Franchisee is not in default of any of its obligations under this Agreement.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, if a franchisee who is an individual transfers the franchise to an entity wholly owned by them, they do not have to pay a transfer fee or comply with Section 19, provided that the owners of the entity are the same people who signed the agreement. However, this is only allowed if the transfer does not result in a change of control of the Southern Steer business. The franchisee must also provide prior written notice to Southern Steer and not be in default of any obligations under the agreement.
This means that a Southern Steer franchisee can transfer their franchise to a business entity they own without incurring extra fees or going through the standard transfer process, as long as the ownership and control remain the same. This provides flexibility for franchisees who want to structure their business in a different legal form, such as forming an LLC or corporation for liability purposes. However, it's crucial that the franchisee ensures the transfer doesn't alter who controls the business, as a change in control would trigger the standard transfer requirements and fees.
It is important for prospective Southern Steer franchisees to understand these conditions, as failing to comply with them could result in a breach of the franchise agreement. Franchisees should consult with legal and financial advisors to ensure any transfer meets all the requirements outlined in the franchise agreement and does not inadvertently trigger a change of control. This provision aims to streamline internal restructuring while maintaining the integrity and control of the Southern Steer brand.