In Michigan, does Southern Steer have a right of first refusal to purchase the assets of a Southern Steer franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
This subdivision does not prevent us from exercising the right of first refusal to purchase the franchise.
This subdivision does not prohibit a provision that grants to us a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants us the right to acquire the assets of a franchise for the market or appraised value of such assets if you have breached the lawful provisions of the Franchise Agreement or Multi Unit Development Agreement and have failed to cure the breach in the manner provided in subdivision (c).
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, Southern Steer is permitted to have a right of first refusal to purchase the assets of a franchise in Michigan. Specifically, a provision that grants Southern Steer a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party is not prohibited in the state of Michigan. This means that if a franchisee in Michigan wants to sell their Southern Steer business, they must first offer Southern Steer the opportunity to buy it on the same terms offered by another potential buyer.
This right of first refusal allows Southern Steer to maintain control over who enters the system and ensures that the brand's standards and reputation are upheld. It also gives Southern Steer the option to expand its company-owned operations if it deems it beneficial. For a franchisee, this means that selling their business may involve an extra step, as they need to provide Southern Steer with the opportunity to match any offer they receive.
However, the right of first refusal does not allow Southern Steer to acquire the assets of a franchise for less than fair market value unless the franchisee has breached the Franchise Agreement. The FDD states that Southern Steer can acquire the assets of a franchise for the market or appraised value if the franchisee has breached the lawful provisions of the Franchise Agreement or Multi Unit Development Agreement and has failed to cure the breach in the manner provided.
Prospective franchisees in Michigan should carefully consider the implications of this right of first refusal. It is essential to understand the terms and conditions under which Southern Steer can exercise this right, as it can impact the franchisee's ability to sell their business to a third party. Franchisees should also be aware of the conditions that would allow Southern Steer to acquire the assets at market or appraised value due to a breach of contract.