What legal convictions or pleas could lead to the termination of a Southern Steer Multi-Unit Development Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) the Multi-Unit Developer or any of its Owners, Operating Principal, Executive Management, Guarantors or Controlled Entity are convicted of, or plead guilty to or no contest to a charge of violating any law, and such conviction or plea could have a material adverse effect on the Multi-Unit Developer 's right or ability to operate the Southern Steer Businesses, perform its obligations under this Agreement or could have a material adverse effect on the Marks, goodwill, reputation or System;
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, a Multi-Unit Development Agreement can be terminated if the Multi-Unit Developer, its Owners, Operating Principal, Guarantors, or any Controlled Entity are convicted of, or plead guilty or no contest to, violating any law. However, this is contingent on the conviction or plea having a material adverse effect. Specifically, it must negatively impact the Multi-Unit Developer's ability to operate the Southern Steer Businesses, fulfill their obligations under the agreement, or materially harm the brand's trademarks, goodwill, reputation, or overall system.
This clause is significant because it broadens the scope of potential termination triggers beyond just business-related offenses. Any legal violation, regardless of its nature, could potentially lead to termination if it meets the 'material adverse effect' threshold. This could include seemingly minor offenses if Southern Steer determines they could damage the brand's reputation.
For a prospective Southern Steer multi-unit developer, this underscores the importance of maintaining a clean legal record, not only for the business itself but also for all associated individuals and entities. Due diligence in ensuring legal compliance at all levels is crucial to avoid potential termination of the development agreement. It would be prudent to seek clarification from Southern Steer regarding what specific types of convictions or pleas they would consider to have a 'material adverse effect' to better understand the scope of this clause.