After the termination of a Southern Steer franchise, is the franchisee prohibited from engaging in a Competitive Business within 50 miles of any other Southern Steer Business?
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, a franchisee is restricted from engaging in a Competitive Business after the termination, transfer, assignment, or expiration of the Franchise Agreement. This restriction lasts for 24 months.
The geographic scope of this post-term covenant not to compete includes several areas. Specifically, it applies to the former Franchised Location, the Protected Area, and areas within 50 miles of the outer boundaries of the Protected Area. It also extends to areas within 50 miles from the Franchised Location, within 50 miles of any other Southern Steer Business, and within any Protected Area or territory granted by Southern Steer through a Multi-Unit Development Agreement, franchise agreement, license agreement, or other territorial agreement.
In practical terms, this means that a former Southern Steer franchisee is significantly limited in their ability to open or be involved with a competing business in a wide geographic area surrounding their former location and other Southern Steer locations. The definition of "Competitive Business" is broad, encompassing businesses that offer similar products or services, operate in competition with Southern Steer, or incorporate distinctive elements of the Southern Steer system. This restriction aims to protect Southern Steer's market and prevent former franchisees from using their knowledge of the business to compete against the franchise system.