Under what circumstances can Southern Steer and the Multi-Unit Developer waive obligations under the Multi-Unit Development Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Multi-Unit Developer will not Transfer or otherwise dispose of any interest in or any part of (a) the Multi-Unit Developer 's interest in this Agreement, including the right of the Multi-Unit Developer to develop Southern Steer Businesses in the Development Territory except as provided for in Section 7.2.
The Multi-Unit Developer will not Transfer or otherwise dispose of any interest in or any part of any Ownership Interest in the Multi-Unit Developer ("Major Assets") to any purchaser without first offering the same to the Franchisor in a written offer that contains the purchase price, payment terms, and all other material terms and conditions of the proposed transaction with the third party, including price and payment terms ("Multi-Unit Developer's Offer").
The Franchisor will have 30 days after receipt of the Multi-Unit Developer's Offer to give the Multi-Unit Developer written notice of the Franchisor's desire to either waive its option to purchase ("Waiver Notice") or its intention to exercise its rights to purchase or acquire the Major Assets according to the terms contained in the Multi-Unit Developer's Offer ("Notice of Intent to Purchase").
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 franchisor has the option to waive its right to purchase the Multi-Unit Developer's assets. Specifically, if the Multi-Unit Developer intends to transfer any interest in the Development Agreement or ownership interest in the Multi-Unit Developer to a third party, they must first offer it to Southern Steer.
Southern Steer then has 30 days to respond with a written notice indicating whether they wish to exercise their option to purchase the assets or waive this right. This notification is termed a "Waiver Notice." If Southern Steer provides a Waiver Notice, they are essentially relinquishing their right to purchase the assets at that time, allowing the Multi-Unit Developer to proceed with the transfer to the third party.
This clause provides Southern Steer with a right of first refusal, a common practice in franchising to maintain control over who enters the system and to protect the brand. For a prospective Multi-Unit Developer, this means they cannot freely sell their development rights or ownership in their company without first offering Southern Steer the opportunity to buy it themselves. This could potentially delay or complicate a sale, but it also ensures that Southern Steer has the chance to maintain control over its brand and expansion strategy.