Who pays for the economic feasibility study for the proposed Southern Steer site?
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.
The issuance of a no-objection letter by the Franchisor will only mean that it has received the Site Information provided by the Franchisee and reviewed the Site Information.
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 the economic feasibility study for the proposed site. While Southern Steer has the right to require this study, the financial burden falls on the franchisee. The study must be completed by an expert mutually agreed upon by both Southern Steer and the franchisee.
This requirement ensures that Southern Steer maintains some control over site selection, as they can request a feasibility study to assess the viability of a location. However, it also places a significant financial responsibility on the franchisee, who must bear the expense of the study. This cost should be factored into the franchisee's initial investment and due diligence process.
It is important to note that even with a feasibility study and Southern Steer's subsequent 'no-objection letter,' this does not guarantee the financial or operational success of the location. The no-objection letter only indicates that Southern Steer has reviewed the provided site information. Therefore, franchisees should carefully consider the potential costs and risks associated with site selection and the economic feasibility study.