Who is the restrictive covenant in the Southern Steer agreement intended to protect?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the foregoing covenants is to be construed as severable and independent and is intended to protect Franchisor, its Affiliates, and their successors and assigns and may be enforced by any of them.
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the restrictive covenants within the franchise agreement are designed to protect Southern Steer Franchising International, LLC, its affiliates, successors, and assigns. These covenants aim to safeguard the franchisor's interests by preventing franchisees, owners, or recipients from engaging in activities that could harm the brand's confidential information, trade secrets, and overall goodwill.
The restrictive covenants include in-term and post-term non-compete clauses that limit the franchisee's ability to participate in competitive businesses during the franchise term and for a specified period afterward. These restrictions apply within certain geographic boundaries, including the franchised location, protected area, and specified distances from other Southern Steer businesses. The agreement emphasizes that these limitations are necessary due to the highly competitive nature of the industry and the franchisee's access to confidential information.
Furthermore, the FDD states that the restrictive covenants are essential to protect the integrity of the Southern Steer system and prevent unauthorized duplication by third parties. The agreement also acknowledges that monetary damages may not adequately compensate Southern Steer for breaches of the agreement, making injunctive relief necessary to protect the franchisor and its franchisees and developers. This ensures that Southern Steer can maintain its competitive edge and protect its brand identity within the market.