For any subsequent Southern Steer businesses opened by a Multi-Unit Developer in the Development Territory, how is the Development Fee portion applied?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
e the Franchise Agreement is executed by the Multi-Unit Developer. No additional Initial Franchise Fee will be due.
- (c) Any Subsequent Southern Steer Businesses. For the any subsequent 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(c) 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.
- Payments to the Franchisor. The Multi-Unit Developer will not, on grounds of the alleged nonperformance by the Franchisor of any of its obligations under this Agreement, any other contract between the Franchisor and the Multi-Unit Developer, or for any other reason, withhold payment of any Development Fees or other payments due the Franchisor pursuant to this Agreement, any Franchise Agreement or any other contract with the Franchisor.
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 Development Fee for subsequent Southern Steer businesses opened by a Multi-Unit Developer is applied towards the initial franchise fee. Specifically, for the second Southern Steer business, the portion of the Development Fee paid, as outlined in Section 4.1(b), will be applied to the then-current initial franchise fee at the time the Franchise Agreement is executed. For any subsequent Southern Steer businesses beyond the second, the portion of the Development Fee paid, as detailed in Section 4.1(c), will be applied to the then-current initial franchise fee at the time the Franchise Agreement is executed. In both cases, no additional initial franchise fee will be due.
This means that the initial Development Fee paid by the Multi-Unit Developer is essentially credited towards the initial franchise fees for each subsequent location they open within their Development Territory. This can significantly reduce the upfront costs for each new franchise, making expansion more financially feasible for the developer. The FDD specifies that the amount credited is based on the initial franchise fee in effect at the time each individual Franchise Agreement is signed, which could fluctuate over time.
It's important to note that the Development Fee is non-refundable, even if the Multi-Unit Developer fails to open all the Southern Steer Businesses they committed to under the Development Schedule. Additionally, the Multi-Unit Developer cannot withhold payments of Development Fees due to alleged non-performance by Southern Steer or offset any amounts owed to them against these fees. Southern Steer, however, retains the right to deduct any fees or payments owed by the Multi-Unit Developer from amounts payable to the Multi-Unit Developer.