Under what circumstances can Southern Steer refuse a transfer of ownership of a franchise in Michigan?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits us to refuse to permit a transfer of ownership of a franchise, except for good cause.
This subdivision does not prevent us from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
(i) The failure of the proposed transferee to meet our then current reasonable qualifications or standards.
(ii) The fact that the proposed transferee is a competitor of us or our subfranchisor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(iv) Your or proposed transferee's failure to pay any sums owing to us or to cure any default in the Franchise Agreement or Multi Unit Development Agreement existing at the time of the proposed transfer.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, there are specific conditions under which Southern Steer can refuse a transfer of ownership of a franchise in Michigan. Southern Steer can refuse a transfer if the proposed transferee fails to meet the brand's current reasonable qualifications or standards. This ensures that new owners are capable of maintaining the standards of operation expected within the Southern Steer system.
Southern Steer can also refuse a transfer if the proposed transferee is a competitor. This is a standard practice in franchising to protect the brand's competitive advantage and trade secrets. Additionally, Southern Steer can block a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, ensuring adherence to the franchise agreement.
Furthermore, Southern Steer can refuse a transfer if the franchisee or proposed transferee has failed to pay any sums owing to Southern Steer or cure any default in the Franchise Agreement existing at the time of the proposed transfer. This protects Southern Steer's financial interests and ensures compliance with the existing agreement. However, it is important to note that these restrictions do not prevent Southern Steer from exercising a right of first refusal to purchase the franchise itself.