Under what conditions can Southern Steer refuse a transfer of ownership of a franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
uthern Steer Businesses that does not include a Transfer of this Agreement to the transferee will constitute a wrongful termination of this Agreement by the Multi-Unit Developer.
- Transfer of Ownership Interest. The Ownership Interests owned by the Multi-Unit Developer or by the Owners of the Multi-Unit Developer may not be Transferred or otherwise disposed of by the Multi-Unit Developer or the Owners until the Ownership Interests have first been offered to the Franchisor in writing. If the Multi-Unit Developer or the Owners desire to Transfer their Ownership Interests, then they will first offer the Ownership Interests in the Multi-Unit Developer to the Franchisor in writing under the same terms and conditions as being offered to any party. The Franchisor will have 30 days within which to accept any offer to purchase the Owner's Ownership Interest in the Multi-Unit Developer. The Owner will be required to comply with the provisions of Section 7 if the Franchisor does not exercise its right to purchase the Owner's Ownership Interest.
- Bankruptcy Issues. If the Multi-Unit Developer or any person or Entity holding any Ownership Interests (direct or indirect) in the Multi-Unit Developer becomes a debtor in a proceeding under the U.S. Bankruptcy Code or any similar law in the U.S. or elsewhere, it is the parties' understanding and agreement that any Transfer of the Multi-Unit Developer's obligations and/or rights hereunder, any material assets of the Multi-Unit Developer , or any indirect or direct interest in the Multi-Unit Developer will be subject to all of the provisions of this Section 9.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MULTI-UNIT DEVELOPER
- Authority. If the Multi-Unit Developer is an Entity, then the Multi-Unit Developer and the Owners represent, warrant and covenant that the execution of this Agreement and the consummation of the transactions contemplated by this Agreement are within the powers granted to the Multi-Unit Developer by the Organizational Documents and have been duly authorized and approved by the Multi-Unit Developer or by the board of directors, managing partner or other governing body of the Multi-Unit Developer.
- Working Capital. The Multi-Unit Developer will, at all times, maintain sufficient working capital to both operate the Southern Steer Businesses and to fulfill its development obligations under this Agreement.
- Ownership.
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, Southern Steer has specific rights and conditions regarding the transfer of ownership interests in a Multi-Unit Developer agreement. Southern Steer requires that if a Multi-Unit Developer or their owners wish to transfer their ownership interests, they must first offer those interests to Southern Steer in writing, presenting the same terms and conditions as offered to any third party. Southern Steer then has 30 days to accept or reject the offer. If Southern Steer declines to purchase the ownership interest, the owner must still comply with the provisions outlined in Section 7 of the agreement.
Southern Steer also prohibits transfers to any entity that owns, operates, franchises, develops, consults with, manages, is involved in, or controls any competitive business or engages in any competitive activity. This restriction is in place to protect Southern Steer's system, marks, reputation, and image, as well as to safeguard the interests of other franchisees. Any transfer that does not include the transfer of the agreement itself to the new party will be considered a breach of the agreement.
Furthermore, any transfer requires Southern Steer's written consent and the receipt of fully executed copies of all assignment documents. Attempted assignments without complying with these requirements will be considered void. These stipulations ensure that Southern Steer maintains control over who becomes a franchisee and that the brand's standards and competitive positioning are preserved.