What are the insolvency-related grounds for immediate termination of a Southern Steer Multi-Unit Development Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
(d) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity is determined to be insolvent within the meaning of applicable state or federal law, any involuntary petition for bankruptcy is filed against the Multi-Unit Developer and the Multi-Unit Developer is unable, within a period of 60 days from such filing, to obtain the dismissal of the involuntary petition, or the Multi-Unit Developer files for bankruptcy or is adjudicated a bankrupt under applicable state or federal law;
(e) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors;
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 Southern Steer's 2025 Franchise Disclosure Document, the Multi-Unit Development Agreement can be terminated immediately if certain insolvency-related events occur involving the Multi-Unit Developer, its Owners, Operating Principal, Guarantors, or any Controlled Entity.
Specifically, the agreement can be terminated if any of these parties are determined to be insolvent under applicable state or federal law. Additionally, the agreement can be terminated if an involuntary petition for bankruptcy is filed against the Multi-Unit Developer, and the developer cannot get the petition dismissed within 60 days. Filing for bankruptcy or being adjudicated bankrupt under state or federal law also constitutes grounds for immediate termination.
Furthermore, the agreement can be terminated if the Multi-Unit Developer, its Owners, Operating Principal, Guarantors, or any Controlled Entity makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors. These conditions protect Southern Steer from financial instability of its multi-unit developers, which could negatively impact the brand and its operations.