Does the post-term covenant not to compete apply if the Southern Steer agreement expires?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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; or (2) the entry of a final order by an arbitrator or a court of competent jurisdiction enforcing this covenant, Franchisee and those persons identified in Section 16.3 will not engage in any Competitive Activity within:
i. the Franchised Location;
ii. the Protected Area;
iii. within 50 miles of the outer boundaries of the Protected Area;
iv. within 50 miles from the Franchised Location;
v. within 50 miles of any other Southern Steer Business, or
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the post-term covenant not to compete does apply upon the expiration of the franchise agreement. Specifically, for a period of 24 months after the termination, transfer, assignment, or expiration of the agreement, the franchisee and related parties cannot engage in any competitive activity within certain defined geographic areas. These areas include the franchised location itself, the protected area granted to the franchisee, and areas within 50 miles of the protected area's outer boundaries, the franchised location, or any other Southern Steer Business.
This non-compete obligation extends not only to the franchisee but also to other individuals associated with the franchisee as identified in Section 16.3 of the agreement. This provision ensures that those connected to the franchisee are also restricted from engaging in competitive activities that could harm Southern Steer's market position. The restrictions are designed to protect Southern Steer's business model, customer base, and market share by preventing former franchisees from directly competing in close proximity to existing Southern Steer locations.
Moreover, even after the agreement expires or is terminated, the franchisee must alter the franchised location to clearly distinguish it from a standard Southern Steer Business. This includes repainting the interior and exterior with entirely different colors, removing all furniture, fixtures, and decor items associated with Southern Steer, removing all Southern Steer signs, and discontinuing the use of approved wall decor items and window decals. These requirements ensure that the location no longer resembles a Southern Steer franchise, preventing confusion among customers and protecting the brand's image.
These post-term obligations highlight the importance of understanding the full scope of restrictions that come into effect at the end of the franchise agreement. Prospective franchisees should carefully consider these limitations and how they might impact their future business endeavors after their relationship with Southern Steer concludes.