Does the Southern Steer MUDA specify any financial penalties associated with early termination of the agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Addendum for state law modifications). |#### THE MUDA RELATIONSHIP
This table lists certain important provisions of the Multi Unit Development Agreement and related agreements. You should read these provisions in the agreements attached to this Disclosure Document.
| Provision | Section in MUDA | Summary | ||
|---|---|---|---|---|
| a. | Length of agreement term | 3 | Begin on the Effective Date and end on the last | |
| day of the calendar month that the final Southern | ||||
| Steer Business is required to be developed and | ||||
| opened under the Development Schedule | ||||
| b. | Renewal or extension of the | Not applicable | ||
| term | ||||
| c. | Requirements for You to | Not applicable | ||
| renew or extend | ||||
| d. | Termination by You | Not applicable | ||
| e. | Termination by franchisor | Not applicable | ||
| without cause | ||||
| f. | Termination by franchisor | 8.1 | If you breach the MUDA. | |
| with cause | ||||
| g. | "Cause" defined – curable defaults | 8.2 | We have the right (subject to state law) to terminate the MUDA upon 30-days' notice if You or Your Controlled Entity failed to comply with the standards and Brand Manual as described in any Franchise Agreement; You fail to obtain required approvals; or any other reason that constitutes good cause under applicable law. | |
| h. | "Cause" defined – non curable defaults | 8.1 | We have the right (subject to state law) to terminate the MUDA immediately upon receipt of notice if Multi-Unit Developer (You): fail to cure the default of your Development Schedule in the MUDA; cease to engage in development activities; fail to pay uncontested obligations or liabilities, are deemed insolvent; make an assignment for the benefit of creditors; or Your 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 or materially violates any federal, state or municipal law, rule, code or regulation applicable to the operations of the Multi-Unit Developer's or Controlled Entity's Southern Steer Businesses, breaches any provision, term or condition of this Agreement or any Franchise Agreement or other agreement between Multi-Unit Developer or Controlled Entity and Franchisor or its Affiliates and fails to cure such default within the period | |
| Provision | Section in | Summary | ||
| MUDA | ||||
| ---- | --------------------------------------------- | -------------------- | -------------------------------------------------------------------------------------------------------------- | -- |
| prescribed; any check or EFT issued by the | ||||
| Multi-Unit Developer or Controlled Entity is | ||||
| dishonored; are involved in any act or conduct | ||||
| which | ||||
| materially | ||||
| impairs | ||||
| the | ||||
| goodwill | ||||
| associated with "Southern Steer Butcher," any | ||||
| other of the Marks or with the System that is not | ||||
| cured | ||||
| within | ||||
| 24 | ||||
| hours; | ||||
| engages | ||||
| in | ||||
| any | ||||
| unauthorized business or practice or sells any | ||||
| unauthorized product or service under the | ||||
| Franchisor's Marks, any Franchise Agreement | ||||
| between You and Franchisor is terminated; or | ||||
| Your Owners, Operating Principal, Executive | ||||
| Management, Guarantors or Controlled Entity | ||||
| breach the non-compete and confidentiality | ||||
| covenants in the Franchise Agreement; two or | ||||
| more | ||||
| defaults | ||||
| in | ||||
| a | ||||
| Development | ||||
| Period | ||||
| regardless of whether the defaults are cured; or | ||||
| assign the MUDA or rights therein without | ||||
| complying with Section 7.2. | ||||
| i. |
Source: Item 17 — ITEM. 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, Item 17 addresses termination of the Multi-Unit Development Agreement (MUDA). The document outlines various conditions under which Southern Steer may terminate the MUDA with cause, which include both curable and non-curable defaults.
Curable defaults allow the franchisee a 30-day notice period to rectify the breach, while non-curable defaults can lead to immediate termination upon notice. These non-curable defaults include failure to meet the development schedule, ceasing development activities, insolvency, or any act that materially impairs the goodwill associated with the Southern Steer brand. Additionally, if any Franchise Agreement between the franchisee and Southern Steer is terminated, it can also result in the termination of the MUDA.
The FDD states that upon termination or non-renewal of the MUDA, the franchisee's rights revert to Southern Steer, but the franchisee must continue to operate any Southern Steer businesses already opened. Southern Steer also reserves the right to purchase these existing businesses from the franchisee. While the table outlines conditions for termination, it does not explicitly detail any specific financial penalties, such as liquidated damages or other fees, that Southern Steer may impose on the franchisee for early termination of the MUDA. A prospective franchisee should seek clarification from Southern Steer regarding potential financial repercussions of early termination to fully understand their obligations.