Under what conditions can a Southern Steer Franchise Agreement be used as collateral?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) Security Interest in Franchise Agreement.
This Agreement and the Southern Steer Business granted to the Franchisee hereunder may not be used by the Franchisee as collateral or be the subject of a security interest, lien, levy, attachment or execution by the Franchisee's creditors, any financial institution, or any other party, except with the prior written approval of the Franchisor.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the Franchise Agreement and the Southern Steer Business granted to the franchisee generally cannot be used as collateral. The document states that these items cannot be subject to a security interest, lien, levy, attachment, or execution by the franchisee's creditors, financial institutions, or any other party.
However, there is an exception to this rule. The Franchise Agreement and Southern Steer Business can be used as collateral if the franchisee obtains prior written approval from Southern Steer. This means that a franchisee would need to formally request and receive permission from Southern Steer before using the agreement or business as security for any financial obligations.
This provision protects Southern Steer by ensuring they have control over who might gain rights over a franchise in the event of a franchisee's financial difficulties. It allows Southern Steer to assess the potential impact on the brand and the franchise system before allowing a third party to gain a security interest in the Franchise Agreement or the Southern Steer Business.