Does Section 14.8 affect the confidentiality of information provided by Southern Steer franchisees?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Within 120 days after the Franchisee's fiscal year end, the Franchisee will furnish the Franchisor with signed copies of all pages of its federal income tax returns pertaining to the Franchisee's Southern Steer Business for the fiscal year or any other period requested by the Franchisor.
Subject to Section 14.8 below, the Franchisor will maintain the confidentiality of the information provided by the Franchisee pursuant to this provision.
- 14.3.
Audit Rights.
Within three business days after receiving written notice from the Franchisor, the Franchisee and the Franchisee's accountants will make all of their Financial Records available during business hours for the Franchisor or its designees to review, copy and audit.
The Financial Records for each fiscal year will be maintained by the Franchisee in a safe place for each of the last five fiscal years.
The audit will be conducted at the location where the Franchisee maintains the Financial Records and the Franchisor will be provided with adequate facilities by the Franchisee to conduct the audit.
Subject to Section 14.8 below, the Franchisor will maintain the confidentiality of all Financial Records; however, if the Financial Records are relevant to any issue in any mediation, court or other proceeding between the parties, then the Franchisor will have the right to disclose the Financial Records accordingly.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, Section 14.8 does affect the confidentiality of information provided by franchisees. Specifically, the franchisor's obligation to maintain confidentiality of financial information and tax returns is subject to the stipulations outlined in Section 14.8. This implies that under certain conditions described in Section 14.8, Southern Steer may not be required to keep franchisee information confidential.
The FDD states that the Franchisor will maintain the confidentiality of the information provided by the Franchisee pursuant to the provision regarding furnishing federal income tax returns and the confidentiality of all Financial Records subject to Section 14.8. It also states that if the Financial Records are relevant to any issue in any mediation, court or other proceeding between the parties, then Southern Steer will have the right to disclose the Financial Records accordingly.
This condition is fairly standard in franchising, as franchisors often need to disclose franchisee data in legal or business contexts. However, prospective Southern Steer franchisees should carefully review Section 14.8 to understand the specific circumstances under which their financial and business information could be disclosed. Understanding these exceptions is crucial for assessing the level of confidentiality they can expect and the potential risks associated with information sharing.
Because the excerpt does not include the text of Section 14.8, it is important for a prospective franchisee to review the full FDD and consult with a legal professional to fully understand the implications of this section. Specifically, they should clarify what events or situations would trigger the exceptions to confidentiality described in Section 14.8.