Under what circumstances can the Southern Steer Franchisor immediately terminate the Multi-Unit Development Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
(g) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity materially violates any federal, state or municipal law, rule, code or regulation applicable to the operations of the Multi-Unit Developer's or Controlled Entity's Southern Steer Businesses, including a violation of any health department rules or regulations relating to any food safety standards that would in any way endanger the health or well-being of any of the customers or guests of the Multi-Unit Developer's or Controlled Entity's Southern Steer Businesses;
(h) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or a Controlled Entity breaches any provision, term or condition of this Agreement or any Franchise Agreement or other agreement between Multi-Unit Developer or Controlled Entity and Franchisor
or its Affiliates and fails to cure such default within the period prescribed in such Franchise Agreement or other agreement;
(i) any check or EFT issued by the Multi-Unit Developer or Controlled Entity is dishonored because of insufficient funds (except where the check is dishonored because of bank error or an error in bookkeeping or accounting) or closed accounts more than three times during the Term of this Agreement;
(j) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity are involved in any act or conduct which materially impairs the goodwill associated with "Southern Steer Butcher," any other of the Marks or with the System and the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity fails to correct the breach within 24 hours after receipt of written notice of the breach from the Franchisor;
(k) the Multi-Unit Developer or any Controlled Entity engages in any unauthorized business or practice or sells any unauthorized product or service under the Franchisor's Marks or under a name or mark which is confusingly similar to the Franchisor's Marks;
(l) any Franchise Agreement between the Multi-Unit Developer (or a Controlled Entity) and the Franchisor is terminated by either party for any reason;
(m) the Multi-Unit Developer, its Owners, Operating Principal, Guarantors, Controlled Entity or any individual breaches the non-compete and confidentiality covenants set out in the Franchise Agreement or the Non-Competition and Non-Disclosure Agreement;
(n) the Multi-Unit Developer has previously received notices of three or more defaults (whether different defaults noticed together or three separate instances of the same default) pursuant to Section 8.2 in a Development Period and is again in default of this Agreement within the Development Period, regardless of whether the previous defaults were cured by the Franchisee; or
(o) the Multi-Unit Developer transfers or otherwise assigns this Agreement or the rights to develop a Southern Steer Business hereunder, or an interest in the Multi-Unit Developer Entity, without complying with the provisions of Section7.2.
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 Southern Steer's 2025 Franchise Disclosure Document, the franchisor can terminate the Multi-Unit Development Agreement immediately under specific circumstances. These include violations of laws or regulations that endanger customers, breaching the agreement or any related franchise agreement without rectifying the issue within the stipulated timeframe, or issues with payments such as dishonored checks or closed accounts occurring more than three times. Furthermore, immediate termination can occur if the developer engages in actions that significantly harm the goodwill associated with the Southern Steer brand, or if they conduct unauthorized business activities using the franchisor's trademarks.
Additionally, Southern Steer can immediately terminate the agreement if any franchise agreement between the developer and Southern Steer is terminated by either party for any reason. Immediate termination is also warranted if the developer, its owners, or any affiliated entity breaches non-compete or confidentiality agreements. The franchisor can also terminate immediately if the developer transfers the agreement or rights without proper authorization, or if the developer has a history of multiple defaults within a development period and is again in default, regardless of whether previous defaults were resolved.
These termination rights are in addition to Southern Steer's right to terminate with 30 days' notice for other breaches of the agreement, providing the franchisee fails to correct the default within that 30-day period. These breaches include failing to maintain operating procedures, neglecting to obtain required approvals, or committing any act that constitutes good cause under applicable law. The franchisor's ability to immediately terminate the agreement highlights the importance of strict adherence to the terms and conditions outlined in the agreement and related documents.
For a prospective Southern Steer multi-unit developer, understanding these conditions for immediate termination is crucial. It emphasizes the need for careful compliance with all aspects of the agreement, including operational standards, legal and regulatory requirements, and financial obligations. Failure to meet these obligations could result in the immediate loss of development rights and potentially impact existing franchise agreements.