Under what circumstances might a prospective Southern Steer franchisee be allowed to enter into a Deposit Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event You are using funds from your 401(k), IRA, other qualified retirement accounts or a third-party lender to purchase Your Southern Steer Business, We may allow You to enter into a Deposit Agreement (Exhibit I) and pay a deposit of $29,750 toward your Initial Franchise Fee when you sign the Deposit Agreement. You will pay the balance of the Initial Franchise Fee on the earlier of (a) receipt of funds from your 401(k), IRA, other qualified retirement accounts or third-party lender; or (b) 30 days from the effective date of the Deposit Agreement ("Payment Date"). We may agree to extend the Payment Date by an additional 30 day period at Your request if You have not received the funds from your 401(k), IRA, other qualified retirement accounts or third-party lender within the original 30-day period set out in the Deposit Agreement. You will sign the Franchise Agreement at the time You pay the Deposit. The Deposit is non-refundable once paid. and the balance of the Initial Franchise Fee will be due on the Payment Date.
Source: Item 4 — ITEM. 4 BANKRUPTCY (FDD pages 10–11)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, a prospective franchisee may be allowed to enter into a Deposit Agreement under specific financial circumstances. If a franchisee intends to use funds from their 401(k), IRA, other qualified retirement accounts, or a third-party lender to finance their Southern Steer Business, Southern Steer may allow them to sign a Deposit Agreement.
The Deposit Agreement requires the franchisee to pay a deposit of $29,750 towards the initial franchise fee. Upon signing the Deposit Agreement, the franchisee also signs the Franchise Agreement. The remaining balance of the initial franchise fee is due either upon receipt of the funds from the specified sources or within 30 days from the Deposit Agreement's effective date, whichever comes first. Southern Steer may grant a one-time extension of an additional 30 days if the franchisee experiences delays in receiving their funds.
It is important to note that the deposit is non-refundable once paid. This arrangement allows franchisees to begin the process of securing their franchise while finalizing their financing, but it also carries the risk of losing the deposit if the funding falls through. Prospective franchisees should carefully consider their financial situation and the likelihood of securing the necessary funds before entering into a Deposit Agreement with Southern Steer.