Is a Southern Steer Multi-Unit Developer allowed to franchise, sub-franchise, license, or sublicense its rights under the Multi-Unit Development Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- Personal License.
The Multi-Unit Developer will not have the right to franchise, sub-franchise, license or sublicense its rights under this Agreement.
The Multi-Unit Developer will not have the right to Transfer this Agreement or its rights under this Agreement, except asspecifically provided for in Section 7.2.
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 Developer is explicitly prohibited from franchising, sub-franchising, licensing, or sublicensing their rights under the Multi-Unit Development Agreement. The agreement strictly defines that the Multi-Unit Developer's rights are personal and cannot be transferred, except as specifically outlined in Section 7.2 of the agreement. This restriction ensures that Southern Steer maintains control over its franchise system and the quality of its brand representation within the designated Development Territory.
This limitation means that a Multi-Unit Developer cannot independently grant franchise rights to others within their territory. They are responsible for developing and operating the Southern Steer businesses themselves, or through a Controlled Entity, according to the Development Schedule. This prevents the Multi-Unit Developer from profiting by simply selling off franchise rights without actively participating in the business operations.
The franchisor retains significant control over the brand and its expansion. Southern Steer reserves the right to use and license the System for operating Southern Steer Businesses inside or outside the Development Area, regardless of proximity to the Development Area, subject to the terms in the Franchise Agreements. They can also offer and sell products and services under other names and marks through alternative channels of distribution. This ensures Southern Steer can adapt to market changes and explore different business models without being restricted by the Multi-Unit Developer's rights.
Prospective Multi-Unit Developers should carefully consider this restriction, as it requires them to be actively involved in the development and operation of multiple Southern Steer locations. They should also review Section 7.2 of the agreement to understand the specific conditions under which a transfer of rights might be permitted, although such instances appear to be limited and subject to the franchisor's approval.