Are there any exclusions to the negotiation requirement for Southern Steer disputes?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Parties recognize and any mediator, arbitrator and judge is affirmatively advised, that certain provisions of this Agreement reflect rights of Franchisor and Franchisee to take (or refrain from taking) certain actions in exercise of its business judgment based on its assessment of the long term interests of the franchised system as a whole.
Where such discretion has been exercised and is supported by the business judgment of Franchisor or Franchisee, a mediator, arbitrator or judge will not substitute his or her judgment for the judgment so exercised by Franchisor or Franchisee.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, certain business judgments made by Southern Steer or its franchisees are excluded from being substituted by a mediator, arbitrator, or judge. Specifically, if Southern Steer or a franchisee exercises discretion that is supported by reasonable business judgment when making decisions for the long-term interests of the franchise system, then an outside party cannot override that judgment. This means that if a dispute arises over a decision made using sound business rationale, the mediator, arbitrator, or judge must defer to the original decision-maker.
This clause emphasizes the importance of business judgment in the Southern Steer franchise system. It protects decisions made by Southern Steer or its franchisees that are based on a well-reasoned assessment of the franchise's best interests. However, it also implies that decisions not based on sound business judgment may be subject to scrutiny and potential challenges during dispute resolution.
For a prospective franchisee, this means understanding the scope of business judgment allowed within the franchise agreement is crucial. It also highlights the need to document the rationale behind key business decisions to demonstrate that they were made thoughtfully and in the best interest of the Southern Steer system. This clause could limit a franchisee's ability to challenge certain franchisor decisions if those decisions are deemed to be based on sound business judgment.