Does Southern Steer have the right to determine how the Brand Fund contributions will be spent?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor has the absolute and unilateral right to determine when, how and where the Brand Fund Contributions and other payments deposited into the Brand Fund will be spent.
This includes (a) the production and placement of media advertising, media relations, creating and testing direct response literature, social media, direct mailings, brochures, collateral material, advertising and public relations expenditures; (b) salaries and administrative costs, insurance, overhead, travel expenses, agency costs and commissions and similar and other expenses incurred by the Brand Fund related to its activities; (c) collection costs and legal expenses related to the Brand Fund's activities; (d) development, modification and management of mobile apps, software, technology solutions and related integration tools and website development, modifications and management (including intranet websites); (e) surveys, market and customer research, product and supplier testing, demographic research, guest satisfaction programs and services, independent shopping, secret shopper and service evaluations; (f) Brand Conferences, Periodic Seminars and Conferences; (g) in store advertising and menu boards and signage; and (h) telemarketing, sponsorships, loyalty programs, gift card programs and incentive programs.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, Southern Steer has considerable discretion over how the Brand Fund is used. Specifically, Southern Steer has the "absolute and unilateral right" to decide when, how, and where the Brand Fund contributions are spent. This fund is supported by franchisee contributions, which are a percentage of their weekly gross revenues.
The FDD outlines various ways Southern Steer may use the Brand Fund, including media advertising, public relations, direct mailings, social media, and website development. The fund can also cover salaries, administrative costs, insurance, travel expenses, and agency commissions related to its activities. Additionally, Southern Steer can use the Brand Fund for market research, customer satisfaction programs, brand conferences, in-store advertising, and loyalty programs.
Southern Steer is not obligated to ensure that Brand Fund expenditures in any geographic area are proportionate or equivalent to the contributions of franchisees operating in that area. The Brand Fund may also borrow or invest money, and any remaining amounts at the end of the year will accrue for future expenses. While franchisees can request an annual unaudited financial statement showing how the Brand Fund was spent, Southern Steer does not provide audited statements.
Southern Steer can also use the Brand Fund to cover its own administrative and overhead costs related to managing the fund and its programs. The Brand Fund can be terminated at any time at Southern Steer's discretion. These terms mean that franchisees have limited control over how their Brand Fund contributions are used, and they rely on Southern Steer's judgment in managing the fund for the overall benefit of the Southern Steer system.