How does the initial franchise fee for Southern Steer (Item 5) being non-refundable affect a potential franchisee's decision-making process, considering the estimated initial investment (Item 7)?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
If You sign a Franchise Agreement for a single Southern Steer Business, You will pay Us an initial franchise fee ("Initial Franchise Fee") of $59,500. You must pay the Initial Franchise Fee in full when You sign the Franchise Agreement. The Initial Franchise Fee is fully earned by Us upon execution by You of the Franchise Agreement and is not refundable under any circumstances. The Initial Franchise Fee is uniform on all Southern Steer Business franchisees except as described below.
In the event You are using funds from your 401(k), IRA, other qualified retirement accounts or a third-party lender to purchase Your Southern Steer Business, We may allow You to enter into a Deposit Agreement (Exhibit I) and pay a deposit of $29,750 toward your Initial Franchise Fee when you sign the Deposit Agreement. You will pay the balance of the Initial Franchise Fee on the earlier of (a) receipt of funds from your 401(k), IRA, other qualified retirement accounts or third-party lender; or (b) 30 days from the effective date of the Deposit Agreement ("Payment Date"). We may agree to extend the Payment Date by an additional 30 day period at Your request if You have not received the funds from your 401(k), IRA, other qualified retirement accounts or third-party lender within the original 30-day period set out in the Deposit Agreement. You will sign the Franchise Agreement at the time You pay the Deposit. The Deposit is non-refundable once paid. and the balance of the Initial Franchise Fee will be due on the Payment Date.
Veterans of the United States armed services will receive a 15% discount on the Initial Franchise Fee.
In our last fiscal year, we collected a range of initial franchise fees of $49,500 to $151,000.
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the initial franchise fee of $59,500 is non-refundable, which significantly impacts a potential franchisee's decision-making process. This fee is fully earned by Southern Steer upon the franchisee signing the Franchise Agreement. This means that once the agreement is signed and the fee is paid, the franchisee cannot get this money back, regardless of whether they proceed with opening the business. This non-refundable policy necessitates careful consideration and due diligence before committing to the franchise. A prospective franchisee should be confident in their decision and fully understand the obligations and risks involved.
For franchisees using funds from a 401(k), IRA, or a third-party lender, Southern Steer may allow a deposit agreement where a deposit of $29,750 is paid, with the balance due later. This deposit is also non-refundable. Veterans of the United States armed services receive a 15% discount on the initial franchise fee. In the last fiscal year, the initial franchise fees collected ranged from $49,500 to $151,000. The non-refundable nature of these fees means that a franchisee needs to carefully assess their financial situation and funding availability before signing any agreements.
Considering the estimated initial investment required to start a Southern Steer business, the non-refundable initial franchise fee represents a notable portion of the total investment. Item 7 of the FDD outlines the estimated initial investment, which includes various costs such as real estate, equipment, and initial marketing expenses. Given that the initial franchise fee is non-refundable, prospective franchisees must weigh this sunk cost against the potential returns and risks of the business. This situation underscores the importance of conducting thorough market research, reviewing the FDD carefully, and seeking professional advice before making a final decision. Franchisees should also inquire about the criteria Southern Steer uses to determine the initial franchise fee, as the collected fees have varied significantly in the past.