After termination or expiration of employment with a Southern Steer franchisee, for how long does the post-term covenant not to compete apply to the Associate?
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 is subject to a post-term covenant not to compete for 24 months after the termination or expiration of their employment or affiliation with the franchisee. During this 24-month period, the Associate is restricted from engaging in any Competitive Business or Competitive Activity within specific geographic areas. These areas include the Protected Area, within 50 miles of the outer boundaries of the Protected Area, within 50 miles from the Franchised Location, within 50 miles of any other Southern Steer Business, or within any Protected Area or territory granted by Southern Steer.
This non-compete agreement prevents the Associate from owning, operating, leasing, franchising, conducting, or being connected with any competitive business within the specified areas. The agreement extends to various roles, including employee, principal, agent, franchisee, independent contractor, consultant, affiliate, licensee, partner, officer, director, shareholder, member, manager, governor, or owner. This broad scope ensures that the Associate cannot bypass the non-compete clause by assuming different roles in a competing business.
The FDD emphasizes that the restrictions are in place to protect Southern Steer's confidential information and trade secrets. The agreement acknowledges that if an Associate were to engage in a Competitive Business, it would be virtually impossible not to rely on or use the Confidential Information and Trade Secrets acquired during their time with the Southern Steer franchisee. This highlights the importance Southern Steer places on safeguarding its business methods and proprietary information.
Prospective franchisees should be aware of these restrictions, as they impact not only the franchisee but also their employees. Franchisees should ensure that their employees understand and agree to these terms to avoid potential legal issues. The geographic scope and duration of the non-compete clause are designed to protect the Southern Steer brand and its franchisees from unfair competition, which is a common practice in the franchise industry.