What role must be designated within the Approved Affiliate or Multi-Unit Developer for Southern Steer, and what ownership interest must they hold?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The only exception to this prohibition is a transfer or assignment to an Entity that is an Approved Affiliate as defined below.
An Approved Affiliate must be a wholly owned subsidiary of the Multi-Unit Developer or an Entity (A) controlled by Multi-Unit Developer or the individual Owners of Multi-Unit Developer as either the (i) general partner of a limited partnership, (ii) the managing member of a limited liability company; (iii) the majority shareholder a corporation; or (iv) a Controlled Entity; and (B) of which Multi-Unit Developer or the individual Owners of Multi-Unit Developer own at least 51% of all Ownership Interest, unless these requirements are waived by the Franchisor, in its sole discretion.
The assignment shall be pre-approved by the Franchisor by its execution of the then current form of Franchise Agreement and Multi-Unit Development Agreement which has also been signed by the Approved Affiliate, provided that:
- (a) One of the individual Owners of the Approved Affiliate or the Multi-Unit Developer, if the Multi-Unit Developer is the parent of the Approved Affiliate, who has a minimum of 51% of the Ownership Interest in the Approved Affiliate or the Multi-Unit Developer, shall be designated by the Multi-Unit Developer as the Operating Principal; and
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, if the Multi-Unit Developer seeks to assign their rights to an Approved Affiliate, specific conditions must be met. The Multi-Unit Developer must designate an Operating Principal who holds a minimum of 51% ownership interest in either the Approved Affiliate or, if the Multi-Unit Developer is the parent company of the Approved Affiliate, in the Multi-Unit Developer entity itself.
This requirement ensures that a responsible individual with a significant stake in the business is actively managing the Southern Steer franchise. By mandating a minimum ownership interest of 51%, Southern Steer aims to align the interests of the Operating Principal with the success and proper operation of the franchise. This structure is designed to prevent absentee ownership and ensure that someone with decision-making power is directly involved in the day-to-day management.
This stipulation is important for prospective Multi-Unit Developers to consider, as it limits their flexibility in structuring their business and assigning responsibilities. They must ensure that the designated Operating Principal meets the ownership requirements to gain Southern Steer's approval for the assignment. If these requirements are not met, Southern Steer has the right to deny the assignment, potentially impacting the Multi-Unit Developer's business plans.