Does Southern Steer have a right of first refusal to purchase a franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
dance with the terms and procedures set forth in such Franchise Agreement.
9. OPTION OF THE FRANCHISOR TO PURCHASE
- Notice. The Multi-Unit Developer will not Transfer or otherwise dispose of any interest in or any part of (a) the Multi-Unit Developer 's interest in this Agreement, including the right of the Multi-Unit Developer to develop Southern Steer Businesses in the Development Territory except as provided for in Section 7.2. The Multi-Unit Developer will not Transfer or otherwise dispose of any interest in or any part of any Ownership Interest in the Multi-Unit Developer ("Major Assets") to any purchaser without first offering the same to the Franchisor in a written offer that contains the purchase price, payment terms, and all other material terms and conditions of the proposed transaction with the third party, including price and payment terms ("Multi-Unit Developer's Offer"). The Franchisor will have 30 days after receipt of the Multi-Unit Developer's Offer to give the Multi-Unit Developer written notice of the Franchisor's desire to either waive its option to purchase ("Waiver Notice") or its intention to exercise its rights to purchase or acquire the Major Assets according to the terms contained in the Multi-Unit Developer's Offer ("Notice of Intent to Purchase").
- Due Diligence Review. If the Franchisor provides the Multi-Unit Developer with a Notice of Intent to Purchase within 30 days after receipt of the Multi-Unit Developer's Offer, then the Franchisor will have 90 days after the date the Notice of Intent to Purchase is received by the Multi-Unit Developer ("Notice Date") to conduct a due diligence review. The Multi-Unit Developer will promptly provide the Franchisor with all Financial Records and other information requested by the Franchisor or its representatives to conduct its due diligence review. The Franchisor will have the absolute and unconditional right to terminate the Notice of Intent to Purchase and any obligation to purchase the Major Assets from the Multi-Unit Developer for any reason and at any time during the 90-day due diligence review period by giving the Multi-Unit Developer written notice.
- Good Faith Negotiations. Unless the Franchisor terminates its Notice of Intent to Purchase as provided in Section 9.2, then the Multi-Unit Developer and the Franchisor will act in good faith to agree on the terms and conditions of the definitive agreement or agreements for the purchase of the Major Assets (other than those objective terms and conditions contained in the Multi-Unit Developer 's Offer) and the closing date for the sale of the Major Assets to the Franchisor will take place within 120 days after the Notice Date.
- Sale to Purchaser.
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, Southern Steer does have a right of first refusal regarding the transfer of a Multi-Unit Developer's interest in the agreement or ownership.
Specifically, before a Multi-Unit Developer can transfer any interest in the agreement or any ownership interest in the Multi-Unit Developer entity, they must first offer it to Southern Steer in writing. This offer must include the purchase price, payment terms, and all other material terms and conditions that are being offered to a third party. Southern Steer then has 30 days to provide written notice of its intention to either waive its option to purchase or to exercise its right to purchase the assets under the terms provided in the Multi-Unit Developer's offer.
If Southern Steer chooses not to exercise its option to purchase and the Multi-Unit Developer proceeds to sell to a third party, both the Multi-Unit Developer and the purchaser are still required to comply with the terms and conditions outlined in Section 7 of the agreement. This ensures that the obligations and standards of the franchise agreement are maintained even with a change in ownership. Any transfer that does not include a transfer of the agreement itself will be considered a wrongful termination of the agreement by the Multi-Unit Developer.