Is participating in the management of a business similar to a Southern Steer franchise considered a 'Competitive Activity'?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- vii. Divert or attempt to divert, directly or indirectly, any business related to, or any customer or account of, Franchisee's Southern Steer Business, Franchisor, Affiliates, any Other Business operated by Franchisor its franchisees, licensees or Affiliates, or any other business then being offered or operated by Franchisor or its Affiliate(s) in the Protected Area.
- (b) In-Term Covenant Not to Compete. Franchisee acknowledges that Franchisor will be unable to protect the System, Confidential Information, Trade Secrets, Brand Manual, Franchisor's proprietary materials and other confidential and proprietary elements of the Southern Steer Business and achieve an exchange of ideas with Franchisee if Franchisee or those persons referenced in Section16.3 were permitted to hold competitive interests or engage in Competitive Activities. Therefore, during the Initial Term and any Interim Period, Franchisee and those persons referred to in Section 16.3 agree not to, directly or indirectly, engage in Competitive Activities anywhere other than as expressly authorized in writing by Franchisor. Franchise acknowledges that a violation of this Section 16.2(b) would constitute an unfair method of competition and would hinder Franchisee's ability to devote sufficient time to the Southern Steer Business.
- (c) Post Term Covenant Not to Compete. For a period of 24 months after the later of (1) the termination, transfer, assignment or expiration of this Agreement;
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, franchisees are restricted from engaging in 'Competitive Activities,' although the document does not explicitly define what constitutes a 'Competitive Activity.'
The FDD states that during the Initial Term and any Interim Period, the Franchisee and those persons referred to in Section 16.3 agree not to, directly or indirectly, engage in Competitive Activities anywhere other than as expressly authorized in writing by Franchisor. Franchise acknowledges that a violation of this Section 16.2(b) would constitute an unfair method of competition and would hinder Franchisee's ability to devote sufficient time to the Southern Steer Business.
After the termination, transfer, assignment or expiration of the Franchise Agreement, the franchisee and related parties are restricted from engaging in any Competitive Activity for a period of 24 months. This restriction applies to the Franchised Location, the Protected Area, within 50 miles of the outer boundaries of the Protected Area, within 50 miles from the Franchised Location, and within 50 miles of any other Southern Steer Business.
Because the definition of 'Competitive Activity' is not provided in the excerpt, prospective franchisees should seek clarification from Southern Steer regarding what specific activities are considered competitive. Understanding this definition is crucial to assessing the restrictions a franchisee will face both during the term of the agreement and after its termination.