Under what conditions can a Southern Steer franchisee proceed with the sale of the business to a third-party purchaser?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisee will have the right to complete the transaction for the sale of the Southern Steer Business or Major Assets to a purchaser according to the terms and conditions contained in the Franchisee's Offer to the Franchisor if: (a) the Franchisor delivers a Waiver Notice to the Franchisee, (b) the Franchisor fails to deliver either a Waiver Notice or the Notice of Intent to Purchase to the Franchisee within 30 days after receiving the Franchisee's Offer, (c) the Franchisor terminates its Notice of Intent to Purchase during the due diligence period pursuant to the provisions of Section 19.2, or (d) the Franchisee and the Franchisor fail to agree on the terms and conditions for the definitive agreement or agreements for the purchase of the Southern Steer Business or Major Assets by the Franchisor from the Franchisee (other than those objective terms and conditions contained in the Franchisee's Offer) on or before the 120th day after the Notice Date.
- 19.5.
Negotiated Changes with Purchaser.
If the Franchisor does not purchase the Major Assets from the Franchisee under the terms and conditions contained in the Franchisee's Offer, then if during any negotiations with the purchaser the Franchisee agrees to negotiate, change, delete, or modify any of the terms and conditions contained in the Franchisee's Offer or the terms and conditions contained in the most recent version of the definitive agreement or agreements proposed by the Franchisee during negotiations that were not acceptable to the Franchisor, then the Franchisee will be required to re-offer to sell the Southern Steer Business or Major Assets to the Franchisor under the new terms and conditions offered to the purchaser in accordance with the provisions of this Section, and the Franchisee's failure to do so will be a material breach of this Agreement.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, a franchisee has the right to sell the Southern Steer business or its major assets to a purchaser under specific conditions related to the franchisor's right of first refusal. The franchisee can proceed with the sale if the franchisor provides a Waiver Notice, indicating they are waiving their right to purchase the business. Alternatively, the franchisee can proceed if Southern Steer fails to respond to the franchisee's offer within 30 days by either providing a Waiver Notice or a Notice of Intent to Purchase.
Additionally, a franchisee can sell to a third party if Southern Steer terminates its Notice of Intent to Purchase during the due diligence period, or if the franchisee and Southern Steer cannot agree on the terms and conditions for the final purchase agreement within 120 days after the Notice Date, excluding the objective terms already in the franchisee's initial offer. However, if the franchisee negotiates changes with the purchaser that differ from the original offer to Southern Steer, the franchisee must re-offer the business to Southern Steer under the new terms. Failure to do so constitutes a material breach of the agreement.
These stipulations ensure that Southern Steer has the first opportunity to buy back the franchise, maintaining control over its brand and operations. The franchisee must adhere strictly to the outlined procedures to avoid breaching the franchise agreement, which could lead to legal and financial repercussions. This process is typical in franchising, as it protects the franchisor's interests while allowing the franchisee an eventual exit strategy.