What is the role of the Operating Principal in the operation of the Southern Steer Business?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
4. OPERATING PRINCIPAL; DESIGNATED MANAGER.
- 4.1. Operating Principal. When the Franchisee signs this Agreement, the Franchisee will designate an individual as the "Operating Principal." If the Franchisee is an individual, then the Operating Principal will be the Franchisee. The Franchisee's Operating Principal must be an individual approved by the Franchisor who (a) owns and controls or has the right to own and control (subject to conditions reasonably acceptable to us) not less than 51% of the ownership equity in the Franchisee, and (b) has the authority to bind the Franchisee regarding all operational decisions with respect to Franchisee's Southern Steer Business. The Operating Principal will be required to execute the personal guaranty attached to this Agreement as Attachment C ("Personal Guaranty") and the Non-Competition and Non-Disclosure Agreement attached to this Agreement as Attachments J-1 and J-2.
- 4.2. Designated Manager. Prior attending the Initial Training Program, the Franchisee will designate an individual as the "Designated Manager." The Designated Manager will, during the entire period he or she serves as the Designated Manager, devote his or her full time and best efforts to the supervision, conduct and day to day operations of the Franchisee's Southern Steer Business. The Designated Manager must be approved by Franchisor; however, the Designated Manager does not have to have an ownership equity interest in Franchisee. The Designated Manager will be required to execute the Non-Competition and Non-Disclosure Agreement attached to this Agreement as Attachments J-1 and J-2.
- 4.3. Replacement Designated Manager. If during the Term of this Agreement or any Interim Period, the Designated Manager is not able or is not qualified to continue to serve in the capacity of Designated Manager, then the Franchisee will promptly notify the Franchisor in writing and will designate a duly qualified replacement Designated Manager within 30 days after the former Designated Manager ceases to serve in that capacity. The replacement Designated Manager will be required to satisfactorily complete the Initial Training Program, at Franchisee's sole cost and expense, and execute the Non-Competition and Non-Disclosure Agreement within the period required by Franchisor.
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 Operating Principal has a significant role in the franchise. The Operating Principal must be an individual approved by Southern Steer who owns or has the right to own and control at least 51% of the ownership equity in the franchise. This individual also needs to have the authority to make all operational decisions for the Southern Steer business. If the franchisee is an individual, then the Operating Principal will be the franchisee.
The Operating Principal is required to complete the Initial Training Program along with the Designated Manager. If they fail to complete the training program satisfactorily, Southern Steer may require them to retake it and pay the current training fee. Furthermore, the Operating Principal must execute a personal guaranty and a Non-Competition and Non-Disclosure Agreement.
In the event that the Franchisee, the Operating Principal or Owners are unable to operate the Southern Steer Business for a period of 45 days or longer for any reason, Southern Steer is authorized to appoint an interim manager to operate the Southern Steer Business. During this time, all revenue will be kept in a separate account, and expenses, including compensation for Southern Steer and its agents, will be charged to the account. Southern Steer will also retain 50% of Gross Revenues as a management fee.