After termination, does the post-term covenant not to compete for a Southern Steer franchisee's Associate extend to any Protected Area or territory granted by the Franchisor?
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, the post-term covenant not to compete for an Associate extends to any Protected Area or territory granted by Southern Steer. Specifically, for 24 months after the termination or expiration of the Associate's employment, the Associate cannot engage in any Competitive Business or Competitive Activity within several defined areas.
These restricted areas include the Protected Area, within 50 miles of the Protected Area's outer boundaries, within 50 miles of the Franchised Location, within 50 miles of any other Southern Steer Business, and within any Protected Area or territory granted by Southern Steer through agreements like Multi-Unit Development Agreements or franchise agreements. This broad geographic scope ensures that the Associate cannot leverage confidential information or trade secrets gained during their employment to compete with Southern Steer or its franchisees.
The Associate's agreement acknowledges that the nature of Southern Steer's business makes it virtually impossible for them not to rely on confidential information if they engage in a Competitive Business or Competitive Activity. This highlights the importance Southern Steer places on protecting its business model and proprietary information.
This non-compete agreement aims to protect Southern Steer's market position and prevent unfair competition from former associates who have inside knowledge of the business. Prospective franchisees should understand the implications of this extended non-compete for their employees and how it may affect their ability to hire and retain staff.