Who pays for the economic feasibility study if Southern Steer requires one?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisor will have the right to require that the Franchisee obtain, at the Franchisee's expense, an economic feasibility study for the proposed site for the Franchised Location.
Any such feasibility study required by the Franchisor will be completed by an expert mutually agreed upon by the Franchisor and the Franchisee in writing.
The Franchisor will review the Site Information and the Franchisee will not purchase or lease a proposed site until the Franchisee has provided the Site Information to the Franchisor, the Franchisor has reviewed the Site Information, and the Franchisor has provided the Franchisee with a no-objection letter for the proposed site.
The review of any Site Information, any visits by the Franchisor to a proposed site, the review of the site, and/or the issuance of a no-objection letter by the Franchisor will not constitute a warranty or representation by the Franchisor or any other party that the site for the Franchised Location chosen by the Franchisee will be a financial or operational success.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the franchisee is responsible for covering the costs of an economic feasibility study for the proposed site of their franchised location, should Southern Steer require one. The study must be conducted by an expert mutually agreed upon in writing by both Southern Steer and the franchisee.
This means that prospective Southern Steer franchisees need to factor in the potential cost of this study when budgeting for their initial investment. The FDD does not specify the potential cost, but feasibility studies can range widely depending on the scope and complexity.
Southern Steer retains the right to request this study, giving them a mechanism to assess the viability of a proposed location. However, even with a no-objection letter from Southern Steer after reviewing the site information, the document explicitly states that this does not constitute a warranty or representation of financial or operational success for the location chosen by the franchisee. This places the ultimate responsibility for site selection and its financial outcome on the franchisee.