If Southern Steer assumes the lease, is it responsible for the franchisee's past-due obligations?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
This right granted by the Franchisee to the Franchisor to assume the Franchisee's position as the tenant under the Lease will be at the Franchisor's sole election, and the Franchisor will bear no responsibility for any of the Franchisee's past-due obligations under the Lease.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, if Southern Steer exercises its option to take over a franchisee's lease, it does not assume responsibility for any past-due obligations the franchisee may have incurred under that lease. This protects Southern Steer from inheriting financial liabilities accrued by the franchisee prior to the lease assignment.
This provision is favorable for Southern Steer, as it allows them to take over a location without being burdened by the franchisee's prior debts. However, the franchisee remains responsible for settling any outstanding balances with the landlord.
Prospective Southern Steer franchisees should understand that this clause exists primarily to protect the franchisor. Franchisees should maintain diligent financial records and ensure timely payments to avoid potential lease defaults and the associated consequences. Franchisees should also be aware that they are responsible for securing the Landlord's written consent to the provisions.