Can Southern Steer require a franchisee to obtain an economic feasibility study for a proposed site?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisee will provide to the Franchisor the information specified by the Franchisor in writing for the proposed site ("Site Information").
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 selecting the site for their Southern Steer business. However, Southern Steer has the right to require the franchisee to obtain an economic feasibility study for the proposed site at the franchisee's expense.
If Southern Steer requires a feasibility study, it must be completed by an expert mutually agreed upon in writing by both Southern Steer and the franchisee. The franchisee cannot purchase or lease a proposed site until they have provided the required site information to Southern Steer, Southern Steer has reviewed it, and Southern Steer has issued a no-objection letter for the proposed site.
It is important to note that Southern Steer's review of site information, site visits, and issuance of a no-objection letter do not constitute a warranty or representation that the chosen site will be a financial or operational success. The no-objection letter only indicates that Southern Steer has received and reviewed the site information provided by the franchisee. This means the franchisee bears the ultimate risk in site selection, even with Southern Steer's input.