Does Southern Steer's review of site information constitute a warranty that the site will be successful?
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 review of site information by Southern Steer does not constitute a warranty or representation that the site chosen by the franchisee will be financially or operationally successful. The FDD states that the franchisee is solely responsible for selecting the site for their Southern Steer Business. Southern Steer recommends that franchisees seek advice from an experienced attorney regarding the terms and conditions of leasing or purchasing the site.
Southern Steer requires franchisees to provide specific site information in writing for review. Southern Steer has the right to require an economic feasibility study at the franchisee's expense, conducted by an expert agreed upon by both parties. The franchisee cannot proceed with purchasing or leasing a site until Southern Steer reviews the site information and issues a no-objection letter.
The issuance of a no-objection letter from Southern Steer only indicates that they have received and reviewed the site information provided by the franchisee. It does not guarantee the site's success. This is a common practice in franchising, as the success of a location depends on numerous factors beyond the franchisor's control, including local market conditions and the franchisee's management skills. Prospective franchisees should conduct their own thorough due diligence and not rely solely on the franchisor's approval when selecting a site.