For Southern Steer, are the non-compete covenants in Section 11 of the Multi-Unit Development Agreement applied and enforced independently of any other non-compete agreements between the Franchisor and the Multi-Unit Developer or Owners?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
11. MULTI-UNIT DEVELOPER 'S COVENANTS NOT TO COMPETE
- Obligation. The Multi-Unit Developer, Controlled Entity (if any) and their Owners acknowledge and agree that the confidentiality and in-term and post-term covenants not to complete set out in the Franchise Agreement are incorporated into this Agreement by reference. The Multi-Unit Developer and Controlled Entity, (if any) and their Owners further acknowledge that they are subject to the confidentiality and in-term and post-term non-compete covenants set out in the Franchise Agreement. The Multi-Unit Developer, Controlled Entity and their Owners will enter into the Non-Competition and Non-disclosure Agreement.
- Effect on Other Agreements. The covenants not to compete set forth in this Section 11 will apply and be enforced independently of any covenant not to compete set forth in any other agreements between the Franchisor and the Multi-Unit Developer (or a Controlled Entity) and/or the Owners.
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, the non-compete covenants outlined in Section 11 of the Multi-Unit Development Agreement are designed to operate independently from any other non-compete agreements that may exist between Southern Steer and the Multi-Unit Developer, Controlled Entity, and/or their Owners. This means that the enforceability and applicability of the covenants in Section 11 are not contingent upon the existence or terms of any other non-compete agreements.
This independence is significant for prospective multi-unit developers because it clarifies that Southern Steer can enforce the Section 11 covenants regardless of other agreements. This could impact the developer's ability to engage in competitive activities, even if those activities might seem permissible under a different agreement. The FDD also states that the Multi-Unit Developer, Controlled Entity, and their Owners will enter into a Non-Competition and Non-disclosure Agreement.
Therefore, a multi-unit developer should carefully review Section 11 and any other non-compete agreements with Southern Steer to fully understand the scope and limitations of each. It is important to assess how these independent covenants might affect future business opportunities and to seek legal counsel to interpret the implications of these provisions.