Under what conditions can the initial term of the Southern Steer franchise agreement be extended?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
anchisee will not have the right to franchise, sub-franchise, license or sublicense its rights under this Agreement. The Franchisee will not have the right to Transfer this Agreement or its rights under this Agreement, except as specifically provided for in this Agreement.
2. TERM OF AGREEMENT.
- 2.1. Term. The initial term ("Initial Term") of this Agreement will commence on the Effective Date and will be for a period of 10 years, unless terminated sooner in accordance with this Agreement. The Initial Term may be extended under certain circumstances to coincide with the term of the lease for Franchisee's Southern Steer Business. This Agreement will not be enforceable until it has been signed by both the Franchisee and 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 initial 10-year term of the franchise agreement can be extended under two specific circumstances. First, the initial term may be extended to coincide with the term of the lease for the franchisee's Southern Steer Business location. This suggests that if a franchisee secures a lease longer than the initial 10-year franchise term, Southern Steer may allow the franchise agreement to be extended to match the lease term.
Second, if a casualty event forces the Southern Steer Business to close, the initial term of the agreement will be extended for the period from the date the business closed until the date it re-opens. This provision ensures that franchisees are not penalized by losing time on their franchise agreement due to unforeseen circumstances that cause a temporary closure of their business.
These extension provisions offer some flexibility to Southern Steer franchisees, particularly in managing their lease agreements and dealing with unexpected events. The extension to match the lease term can be beneficial for franchisees who want to align their franchise agreement with their property lease, while the extension due to a casualty provides a safety net in case of business interruption.