Does owning stock in a company that engages in activities similar to a Southern Steer franchise constitute a 'Competitive Activity'?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
16.2. Non-Competition.
(a) Definition of Competitive Activity. "Competitive Activity" means:
- i.
Offering products and services that are the same as, similar to or competitive with a Southern Steer Business;
- ii.
Operating a business or selling goods or providing services that features butcher, specialty grocer, marinated meats, or food preparation classes or that employs or incorporates one or more distinctive elements of the System;
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, owning stock in a company that offers products or services similar to a Southern Steer business may be considered a 'Competitive Activity.' The FDD defines 'Competitive Activity' as offering similar products or services, operating a business featuring butcher services, specialty groceries, marinated meats, or food preparation classes, or using distinctive elements of the Southern Steer system.
This definition has significant implications for prospective franchisees. During the Initial Term and any Interim Period, franchisees are prohibited from engaging in Competitive Activities unless expressly authorized in writing by Southern Steer. This restriction ensures that franchisees devote sufficient time and effort to their Southern Steer Business and prevents unfair competition against the brand.
Furthermore, the FDD states that franchisees and their owners are prohibited from transferring their ownership interests to any entity that owns, operates, franchises, develops, consults with, manages, is involved in, or controls any Competitive Business. This restriction applies not only to direct competitors but also to entities involved in managing or consulting with such businesses. If Southern Steer refuses a transfer based on this provision, the franchisee's only recourse is to have an arbitrator determine whether the proposed transferee owns or operates a Competitive Business, with the franchisee bearing all associated costs and fees.
These non-compete clauses extend beyond the term of the franchise agreement. For a period of 24 months after termination, transfer, assignment, or expiration of the agreement, franchisees and related parties are restricted from engaging in any Competitive Activity within the franchised location, the protected area, or within 50 miles of these areas or any other Southern Steer Business. This post-term covenant further protects Southern Steer's market position and proprietary information.