For the second Southern Steer Business, how is the initial franchise fee determined for the Multi-Unit Developer?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
ial Franchise Agreement is executed by the Multi-Unit Developer. No additional Initial Franchise Fee will be due.
(b) Second Southern Steer Business. For the second Southern Steer Businesses Multi-Unit Developer is required to open and operate in the Development Territory pursuant to the Development, the portion of the Development Fee paid in accordance with Section 4.1(b) will be applied as the then current initial franchise fee set out in the then-current Franchise Agreement at the time the Franchise Agreement is executed by the Multi-Unit Developer. No additional Initial Franchise Fee will be due.
(c) Any Subsequent Southern Steer Businesses.
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 initial franchise fee for the second Southern Steer business opened by a Multi-Unit Developer is determined by applying a portion of the development fee. Specifically, the portion of the development fee paid in accordance with Section 4.1(b) will be applied as the then-current initial franchise fee set out in the then-current Franchise Agreement at the time the Franchise Agreement is executed by the Multi-Unit Developer. No additional initial franchise fee will be due. Section 4.1(b) states that the development fee for the second Southern Steer Business is $49,500.
In simpler terms, when the Multi-Unit Developer signs the Franchise Agreement for their second Southern Steer location, $49,500 of the development fee they already paid will be credited towards the initial franchise fee. This means they won't have to pay an additional initial franchise fee at that time.
This arrangement is beneficial for multi-unit developers as it essentially prepays the initial franchise fees as part of the larger development fee. It's important to note that the development fee is non-refundable, even if the developer fails to open all the planned Southern Steer Businesses. Therefore, prospective multi-unit developers should carefully consider their ability to meet the development schedule before entering into such an agreement with Southern Steer.