Under what agreement sections is Southern Steer franchisee site selection and acquisition/lease obligations defined?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Purchase or Lease of Site.
The Franchisee will provide the Franchisor with a copy of the proposed Lease for the site of the Franchised Location selected by the Franchisee at least 30 days before the date the Lease is to be signed.
The Franchisor may, but is not required, to assist the Franchisee in negotiating the terms of the Lease.
The Franchisor's review of the Lease will be only to determine whether the terms of the Lease comply with the terms and conditions of this Agreement, and not to provide any business, economic, legal or real estate advice or analysis.
The Franchisee will be solely responsible for all terms of the Lease, including the enforceability, economics and legality of all provisions in the Lease.
The enforceability of the Lease must be conditioned on Franchisor approving the Franchisee as a Southern Steer Franchisee and the enforceability of this Agreement.
The Franchisee will not sign the Lease until (a) this Agreement has been signed by both the Franchisee and the Franchisor; and (b) the Lease contains the terms required under this Section and the terms set forth in the Form of Lease Addendum attached to this Agreement as Attachment F.
The Franchisee will use its best efforts to negotiate and secure from the lessor of the Franchised Location the terms and conditions set forth herein and in the Form of Lease Addendum attached hereto.
In addition, the terms of the Lease must also give the Franchisor the right to enter the premises of the Franchised Location to conduct inspections during regular business hours.
Further, the Franchisee must execute a Collateral Assignment of Lease attached to this Agreement as Attachment F-1, whereby the Franchisee agrees to assign the Franchisee's rights in the Lease to the Franchisor in the event of a termination or expiration of the term of this Agreement or a default under the Lease.
The Franchisee will provide executed copies of the Lease or purchase closing documents for the Franchised Location within 10 days after their execution.
Franchisee will be required to execute a lease that complies with this Section within 90 days after the Effective Date.
- 5.4.
Site Release.
Source: Item 9 — ITEM. 9 FRANCHISEE'S OBLIGATIONS (FDD pages 24–25)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the franchisee's obligations regarding site selection and lease acquisition are detailed in several sections. Specifically, Section 5.4 addresses site release, clarifying that Southern Steer has no obligation to assist in site selection or acquisition. Section 5.5 outlines the standard plans and specifications, noting that franchisees are responsible for architectural plans and modifications to suit their location. Section 5.6 mandates compliance with Southern Steer's design standards for the franchised location.
Furthermore, the document specifies that franchisees must provide a copy of the proposed lease to Southern Steer at least 30 days before signing. While Southern Steer may assist in negotiating lease terms, the franchisee bears sole responsibility for the lease's terms, enforceability, and legality. The lease must also grant Southern Steer the right to inspect the premises and include a Collateral Assignment of Lease, assigning the franchisee's lease rights to Southern Steer upon termination or default. The franchisee must execute a lease that complies with these requirements within 90 days of the agreement's effective date.
These provisions highlight that while Southern Steer provides design standards and may offer some assistance, the franchisee is primarily responsible for finding a suitable location and negotiating lease terms. This arrangement is fairly common in the franchise industry, where franchisees often have local market knowledge, but it also places a significant burden on the franchisee to conduct thorough due diligence and secure favorable lease terms. The franchisor's right to inspect the premises and the collateral assignment of lease are mechanisms to protect Southern Steer's interests and ensure brand consistency and operational control.