Under what four conditions can a Southern Steer franchisee proceed with a sale 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.
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 complete a sale of their Southern Steer business or its major assets to a third-party purchaser under specific conditions. These conditions are centered around Southern Steer's right of first refusal and the timeline associated with it. Understanding these conditions is crucial for any franchisee considering selling their business.
The first condition is if Southern Steer delivers a Waiver Notice to the franchisee, indicating they are waiving their right to purchase the business. The second condition arises if Southern Steer fails to respond to the franchisee's offer within 30 days, either by delivering a Waiver Notice or a Notice of Intent to Purchase. This lack of response within the specified timeframe allows the franchisee to proceed with the third-party sale.
The third condition is if Southern Steer initiates a Notice of Intent to Purchase but later terminates it during the due diligence period. This implies that Southern Steer initially showed interest but then backed out after further investigation. Lastly, a franchisee can proceed with a third-party sale if the franchisee and Southern Steer cannot agree on the terms and conditions for the definitive agreement for the purchase of the Southern Steer business or major assets by Southern Steer 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.
These conditions provide a framework for the sale process, balancing the franchisee's right to sell their business with Southern Steer's interest in maintaining control over its brand and network. Franchisees should pay close attention to these timelines and communication requirements to ensure a smooth and compliant sale process. It is also important to note that if the franchisee negotiates changes with the purchaser, 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.