Are the rights granted to the Franchisee in the Southern Steer Multi-Unit Development Agreement exclusive?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- Non-Exclusive.
The Franchisee acknowledges that the rights granted in this Agreement are non-exclusive.
However, so long as Franchisee is not in default of this Agreement, the Franchise Agreement for Multi-Unit Developer's first Southern Steer Business ("Initial Franchise Agreement") or any other agreement between Multi-Unit Developer and Franchisor, Franchisor will not operate or license a third party to operate a Southern Steer Business in the Development Territory for the First Period set out in the Development Schedule attached hereto as Attachment A.
Upon expiration of the First Period, Franchisor has the right to operate and license third parties to operate Southern Steer Businesses in the Development Territory.
- Reservation of Rights.
Notwithstanding Section 2.2, the Franchisor and its Affiliates will have the absolute right to:
(a) Subject to the terms and conditions of the Franchise Agreements between Franchisor and Multi-Unit Agreement regarding the Protected Area defined therein, to use, and license the use of, the System or component(s) thereof, for the operation of Southern Steer Businesses inside or outside the Development Area, regardless of proximity to the Development Area;
(b) To offer and sell any products and services sold at Southern Steer Businesses under any other names and marks, including through alternative channels of distribution anywhere;
(c) To offer and sell, and/or license or franchise others to offer and sell, products and services for Other Businesses and market Other Businesses to anyone, including prospective and existing franchisees anywhere within or outside of the Development Territory;
(d) To acquire businesses that are the same as or similar to the Southern Steer Business and operate such businesses anywhere within or outside of the Development Territory and to be acquired by any third party which operates businesses that are the same as or similar to the Southern Steer Business anywhere within or outside of the Development Territory;
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 rights granted to a franchisee in the Multi-Unit Development Agreement are generally non-exclusive. However, Southern Steer assures that as long as the franchisee is not in default of the agreement, the Franchise Agreement for the Multi-Unit Developer's first Southern Steer Business, or any other agreement between the Multi-Unit Developer and Southern Steer, the company will not operate or license a third party to operate a Southern Steer Business in the Development Territory for a specified 'First Period'. The specifics of this 'First Period' are detailed in the Development Schedule, which is attached to the agreement as Attachment A.
This initial period of protection offers the franchisee a limited time to establish their business without direct competition from other Southern Steer outlets within their designated territory. However, it's crucial to understand that this protection is temporary. Upon the expiration of the 'First Period,' Southern Steer retains the right to operate or license others to operate Southern Steer Businesses within the same Development Territory. This means that after the initial protected period, the franchisee may face competition from other Southern Steer locations, which could impact their market share and profitability.
Furthermore, Southern Steer reserves several rights that could affect the franchisee's business. These include the right to use and license the Southern Steer system for businesses inside or outside the Development Area, regardless of proximity, subject to the terms in the Franchise Agreements regarding the Protected Area. Southern Steer can also offer and sell products and services under different names and marks through alternative channels of distribution, and offer and sell products/services for other businesses, even within the Development Territory. Additionally, Southern Steer can acquire and operate similar businesses or be acquired by a third party operating similar businesses within or outside the Development Territory. These reservations highlight the importance of carefully evaluating the long-term competitive landscape and potential impact on the franchisee's business.