Is the Protected Area granted to a Southern Steer franchisee exclusive?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
the Franchise Agreement if Franchisee fails to provide Site Information for the Franchised Location and fails to lease a site for the Franchised Location, approved by Franchisor, within 90 days after the Effective Date of this Agreement.
- 1.4. Protected Area. Except as provided to the contrary in this Section, the Franchisee will receive the nonexclusive "Protected Area" defined in the Attachment A attached to this Agreement. Subject to the reservation of rights set out in Sections 1.2 (b)-(g) and Section 1.6 and so long as the Franchisee is not in default of this Agreement or any other agreement with Franchisor or any of Franchisor's Affiliates past applicable cure periods, the Franchisor and its Affiliates will not have the right to own, operate, franchise or license others to own or operate a Southern Steer Business physically located within the Franchisee's Protected Area, with the exception of Non-Traditional Locations.
- 1.5. Relocation.
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 Protected Area granted to franchisees is nonexclusive. While Southern Steer agrees not to operate or franchise another Southern Steer Business physically located within the franchisee's Protected Area, this is subject to several significant exceptions. These exceptions include the right to operate Southern Steer Businesses from Non-Traditional Locations within the Protected Area. Additionally, Southern Steer retains the right to use and license the System for Southern Steer Businesses inside or outside the franchisee's Protected Area.
Southern Steer also reserves the right to offer and sell products and services sold at Southern Steer Businesses under other names and marks through alternative channels of distribution. They can also offer and sell products and services for other businesses and market these to anyone, including existing or prospective franchisees, within or outside the franchisee's Protected Area. Furthermore, Southern Steer can acquire and operate businesses similar to Southern Steer, or be acquired by a third party operating similar businesses, within or outside the Protected Area.
Southern Steer also retains the right to market, distribute, and sell food products and ancillary goods through various channels, including wholesale, retail, the Internet, mail order, food trucks, third-party delivery services, and other methods, within or outside the franchisee's Protected Area. They can also implement multi-area marketing and delivery service programs that may solicit or sell to customers anywhere. These extensive reservations mean that a Southern Steer franchisee's Protected Area does not guarantee exclusive rights to the market, and the franchisee may face competition from Southern Steer itself or other channels within their territory.
Moreover, if a Southern Steer franchisee fails to meet the Minimum Gross Revenues for any Year, Southern Steer has the right to decrease or modify the franchisee's Protected Area, operate or license others to operate Southern Steer Businesses in the Protected Area, or terminate the Franchise Agreement. This condition adds further risk, as a franchisee's Protected Area can be reduced or eliminated based on performance, increasing the potential for direct competition within what was initially defined as their territory.