Before transferring Ownership Interests in a Southern Steer franchise, what action must the Franchisee or Owners take?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
nted to it pursuant to this Section and if the Franchisee sells or otherwise disposes of its Southern Steer Business or Major Assets to a third party, then both the Franchisee and the purchaser will be required to comply in all respects with the terms and conditions of Section 18 of this Agreement. Any Transfer of the Southern Steer Business or Major Assets of the Franchisee's Southern Steer Business that does not include a Transfer of this Agreement to the Transferee will constitute a wrongful termination of this Agreement by the Franchisee.
- 19.8. Transfer of Ownership Interest. The Ownership Interests owned by the Franchisee or by the Owners of the Franchisee may not be Transferred by the Franchisee or the Owners until the Ownership Interests have first been offered to the Franchisor in writing. If the Franchisee or the Owners desire to Transfer their Ownership Interests, then they will first offer the Ownership Interests in the Franchisee to the Franchisor in writing under the same terms and conditions as those being offered to any party. The Franchisor will have 30 days to accept any offer to purchase the Owner's Ownership Interest in the Franchisee. The Owner will be required to comply with the provisions of Section 18.6 if the Franchisor does not exercise its right to purchase the Owner's Ownership Interest.
- 19.9. Acknowledgment of Restrictions. The Franchisee and Owners acknowledge and agree that the restrictions on Transfer imposed herein are reasonable and are necessary to protect the System and the Marks, as well as the reputation and image of the Franchisor, and are for the protection of the Franchisor, the Franchisee and all other franchisees and developers who operate Southern Steer Businesses. Any Transfer permitted by this Agreement will not be effective until the Franchisor receives a completely executed copy of all Transfer documents and the Franchisor consents to the Transfer in writing.
- 19.10. Right of Franchisor to Purchase Major Assets Upon Termination or Expiration of Franchise Agreement.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, if a franchisee or owner wishes to transfer their ownership interests, they must first offer those interests to Southern Steer in writing. This offer must be under the same terms and conditions as those being offered to any other party. Southern Steer then has 30 days to accept or decline the offer to purchase the ownership interest. If Southern Steer does not exercise its right to purchase the ownership interest, the owner must comply with the provisions outlined in Section 18.6 of the franchise agreement.
Section 18.6 specifies that no owner has the right to transfer an ownership interest without prior written approval from Southern Steer. However, Southern Steer will not withhold consent if the transfer complies with the terms of the agreement and Southern Steer does not exercise its right of first refusal as per Section 19. A transfer to a relative (spouse, child, parent, sibling, grandchild), an existing owner, or an entity wholly owned by the franchisee does not require a transfer fee. Franchisees must also provide Southern Steer with a list of all owners and their respective ownership interests upon request.
These stipulations are in place to protect Southern Steer's brand, system, marks, reputation, and image. The FDD states that restrictions on transfer are deemed reasonable and necessary for the protection of Southern Steer, its franchisees, and developers. Any transfer is not effective until Southern Steer receives all transfer documents and provides written consent.
Prospective Southern Steer franchisees should understand these transfer conditions, as they dictate the process for selling or transferring ownership. The right of first refusal gives Southern Steer control over who becomes a franchisee, and the conditions ensure compliance with the franchise agreement and protect the brand's integrity. Franchisees should carefully review Section 18.6 and Section 19 of the franchise agreement to fully understand their obligations and Southern Steer's rights regarding ownership transfers.