What minimum Ownership Interest must the Multi-Unit Developer (or the Multi-Unit Developer's Owners) maintain in the Controlled Entity during the Term of the Multi-Unit Development Agreement for a Southern Steer Business?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Franchise Agreement required to be executed pursuant to this Section 6 (and the other applicable provisions of this Agreement) is executed by an approved Controlled Entity, then: (a) the Multi-Unit Developer (or the Multi-Unit Developer's Owners) will be required to maintain at least a 51% Ownership Interest in the Controlled Entity during the Term of this Agreement; and (b) the Multi-Unit Developer will not be relieved from complying with the terms, conditions and the Multi-Unit Developer's obligations set forth in this Agreement.
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, if a Multi-Unit Developer chooses to operate a Southern Steer Business through a Controlled Entity, the Multi-Unit Developer (or the Multi-Unit Developer's Owners) must maintain at least 51% ownership interest in that Controlled Entity throughout the term of the Multi-Unit Development Agreement.
This requirement ensures that the Multi-Unit Developer retains significant control and financial stake in the Southern Steer Businesses operating under the development agreement. This is a common practice in multi-unit franchising, as it aligns the interests of the developer with the success and brand standards of Southern Steer.
Even if a Controlled Entity is used to execute the Franchise Agreement, the Multi-Unit Developer remains responsible for fulfilling all obligations outlined in the Multi-Unit Development Agreement. This means Southern Steer holds the Multi-Unit Developer accountable for the performance and compliance of the Controlled Entity, providing an additional layer of security for the franchise system.