Can a notice for arbitration stay a demand for performance or notice of termination by Southern Steer?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Only those portions of the arbitration clause with respect to such claim or claims as are necessary to comply with applicable law will be invalid and considered severable, but the remainder will be enforced.
- Definition of Dispute.
Subject to Section 14.4, "Dispute" means any disputes, controversies or claims between Franchisor, its Affiliate, shareholders, owners, officers, directors, agents, employees and attorneys (in their respective capacity) and Multi-Unit Developer and Controlled Entity (if any) and Multi-Unit Developer and Controlled Entity (if any)'s Operating Principal, Owners, Guarantors, Designated Manager(s), affiliates, officers, directors, agents and employees (collectively, "Parties") (a) arising out of or related to this Agreement or any other agreement between the Parties relating to the Southern Steer Business or the relationship of the Parties hereto; (b) the relationship of the Parties hereto; (c) the Multi-Unit Developer or Controlled Entity's development of Southern Steer Businesses; (d) the scope or validity of this Agreement or any other agreement between the Parties relating to the Southern Steer Business or the relationship of the Parties hereto or any provision thereof (including the validity and scope of the arbitration obligation, which Multi-Unit Developer and Controlled Entity (if any) and Franchisor acknowledge will be determined by an arbitrator and not a court, unless the arbitrator invalidates the Arbitration provision in its entirety, in which case, wither party has the right to appeal such invalidation to a court of competent jurisdiction).
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)
Based on the 2025 Southern Steer Franchise Disclosure Document, the document does not explicitly state whether a notice for arbitration can stay a demand for performance or notice of termination. The FDD does outline conditions under which Southern Steer can terminate the agreement, such as the Multi-Unit Developer's failure to adhere to operating procedures, neglecting to obtain required prior written approval, or committing acts that constitute good cause under applicable law.
Additionally, the FDD details various scenarios that could lead to immediate termination without prior notice, including breaches of non-compete and confidentiality covenants, repeated defaults, unauthorized business practices, or the termination of any Franchise Agreement between the Multi-Unit Developer and Southern Steer.
While the FDD defines what constitutes a "Dispute" subject to arbitration, it does not specify the procedural implications of initiating arbitration, such as whether it would halt other actions like termination. A prospective franchisee should seek clarification from Southern Steer regarding the relationship between arbitration proceedings and the franchisor's right to demand performance or issue a notice of termination.