After the termination of the Southern Steer Franchise Agreement, for how long does the post-term covenant not to compete last?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Post-Term Covenant Not to Compete. For a period of 24 months after the later of (i) the termination, transfer, assignment or expiration of this Agreement; or (ii) the entry of a final order by an arbitrator or a court of competent jurisdiction enforcing this covenant, neither the Franchisee, the Owners, or the Recipients will, on their own account or as an employee, principal, agent, franchisee, independent contractor, consultant, affiliate, licensee, partner, officer, director, shareholder, member, manager, or owner of any other person or Entity, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or Entity engaged in any Competitive Business or Competitive Activity within:
- (i) the Franchised Location;
- (ii) the Protected Area;
- (iii) within 50 miles of the outer boundaries of the Protected Area;
- (iv) within 50 miles from the Franchised Location;
- (v) within 50 miles of any other Southern Steer Business, or (vi) 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.
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 post-term covenant not to compete lasts for 24 months. This restriction begins after the later of either the termination, transfer, assignment, or expiration of the Franchise Agreement, or the entry of a final order by an arbitrator or court enforcing the covenant.
During this 24-month period, the franchisee, owners, or recipients are prohibited from engaging in any Competitive Business or Competitive Activity. This includes owning, operating, leasing, franchising, conducting, or having any interest in a competitive business. The restriction applies to activities conducted directly or indirectly, whether as an employee, principal, agent, franchisee, independent contractor, consultant, affiliate, licensee, partner, officer, director, shareholder, member, manager, or owner.
The non-compete restrictions apply within specific geographic areas: the Franchised Location, 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 broad geographic scope means a former franchisee would need to be very careful about starting a similar business nearby.
These non-compete terms are fairly standard in franchising to protect the brand and system. Prospective Southern Steer franchisees should carefully consider the implications of these restrictions, especially if they plan to remain in the same geographic area after leaving the Southern Steer system.