Before signing any Franchise Agreement for a Southern Steer Business, are the Owners of the Controlled Entity subject to Franchisor's approval?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- Ownership of Controlled Entity.
All Owners of the Controlled Entity are subject to Franchisor's prior approval before signing any Franchise Agreement and must meet the Franchisor's then current criteria for Franchisees.
If the Franchise Agreement required to be executed pursuant to this Section 6 (and the other applicable provisions of this Agreement) is executed by an approved Controlled Entity, then: (a) the Multi-Unit Developer (or the Multi-Unit Developer's Owners) will be required to maintain at least a 51% Ownership Interest in the Controlled Entity during the Term of this Agreement; and (b) the Multi-Unit Developer will not be relieved from complying with the terms, conditions and the Multi-Unit Developer's obligations set forth in this Agreement.
If the Multi-Unit Developer elects to have a Controlled Entity execute the Franchise Agreement for any Southern Steer Business being developed under this Agreement, then all terms, conditions and obligations under this Agreement relating to compliance with the Franchise Agreement for that Southern Steer Business will be the obligation of the Controlled Entity, and not the Multi-Unit Developer.
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, all owners of a Controlled Entity must receive prior approval from Southern Steer before signing any Franchise Agreement. These owners must also meet Southern Steer's current criteria for franchisees. A "Controlled Entity" is defined as an entity where the Multi-Unit Developer owns at least 51% of the ownership interests, or the Multi-Unit Developer's owners hold at least 51% of the ownership interests.
This requirement ensures that Southern Steer maintains control over who is involved in operating a franchise under their brand. By requiring approval and adherence to franchisee criteria, Southern Steer aims to uphold brand standards and protect its reputation. This also ensures that individuals involved in the business have the necessary qualifications and meet the franchisor's standards.
Furthermore, the Multi-Unit Developer (or their owners) must maintain at least a 51% ownership interest in the Controlled Entity throughout the term of the agreement. The Multi-Unit Developer remains responsible for complying with the terms and conditions of the agreement, even if the Franchise Agreement is executed by an approved Controlled Entity. This condition ensures the Multi-Unit Developer remains invested and accountable for the Southern Steer business's performance and adherence to the franchise agreement.
If a Multi-Unit Developer chooses to have a Controlled Entity execute the Franchise Agreement, the Controlled Entity, not the Multi-Unit Developer, assumes all obligations related to compliance with the Franchise Agreement. This distinction clarifies the responsibilities and liabilities of each party involved in the franchise operation.