After termination, is an Associate of a Southern Steer franchisee prohibited from owning a Competitive Business within the Protected Area?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Post-Term Covenant Not to Compete. For a period of 24 months after the termination or expiration of the Associate's employment or affiliation with the Franchisee, Associate will not, on Associate's own account or as an employee, principal, agent, franchisee, independent contractor, consultant, affiliate, licensee, partner, officer, director, shareholder, member, manager, governor or owner of any other person or entity, own, operate, lease, franchise, conduct, engage in, be employed by or connected with, have any interest in or assist any person or entity engaged in any Competitive Business or Competitive Activity within:
- (i) the Protected Area;
- (ii) within 50 miles of the outer boundaries of the Protected Area;
- (iii) within 50 miles from the Franchised Location;
- (iv) within 50 miles of any other Southern Steer Business, or
- (v) within any Protected Area or territory granted by the Franchisor pursuant to a Multi-Unit Development Agreement, franchise agreement, license agreement or other territorial agreement.
The Associate expressly agrees that the nature of both the Franchisee's and the Franchisor's business is such that if Associate were to directly or indirectly act in violation hereof in connection with a Competitive Business or Competitive Activity it would be virtually impossible for the Associate not to rely on or use the Confidential Information and Trade Secrets.
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, an Associate of a Southern Steer franchisee faces certain restrictions after their employment or affiliation ends. Specifically, for 24 months after termination or expiration, the Associate is prohibited from owning, operating, or being involved with any Competitive Business or Competitive Activity. This restriction applies not only within the Protected Area but also within 50 miles of its outer boundaries, the Franchised Location, any other Southern Steer Business, or any Protected Area granted by Southern Steer.
This post-term covenant not to compete is in place to protect Southern Steer's confidential information, trade secrets, and goodwill. The FDD emphasizes that due to the nature of the business, it would be nearly impossible for an Associate to work in a Competitive Business without relying on the confidential information they gained during their time with the Southern Steer franchisee. This is a fairly standard practice in franchising, particularly in food-related businesses where brand consistency and proprietary recipes are crucial.
The Associate also acknowledges that the limitations on time, geography, and scope are reasonable, considering the competitive industry and the Associate's access to confidential information like the Brand Manual. Furthermore, the Associate agrees that money damages may not be sufficient to compensate Southern Steer or the franchisee in case of a breach, and injunctive relief may be necessary. This means Southern Steer can seek a court order to prevent the Associate from violating the non-compete agreement.
Prospective franchisees should carefully review these restrictions and ensure that their employees or management staff are aware of these obligations. It is also important to understand the definition of "Competitive Business or Competitive Activity" as defined in the Franchise Agreement to fully grasp the scope of these limitations.