Under the Southern Steer franchise agreement, are disputes regarding data security, confidential information, trade secrets, and non-compete covenants subject to mediation or arbitration?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
22.4. Disputes Not Subject to Mediation and Arbitration. The following disputes between the Franchisor and the Franchisee will not be subject to mediation or arbitration:
- (a) use of the Marks, Confidential Information, Trade Secrets or Copyrighted Materials by the Franchisee, its Owners, directors, officers, agents, Guarantors, Operating Principal, Designated Manager(s), employees, affiliates or contractors;
- (b) conduct which is alleged to otherwise infringe the intellectual property rights of Franchisor or any of its Affiliates;
- (c) the obligations of the Franchisee and the Franchisor upon termination or expiration of this Agreement;
- (d) any alleged breach of the provisions of this Agreement relating to data security, Confidential Information, Trade Secrets and in-term and post-term covenants not to compete contained in Section 16;
- (e) any dispute regarding the Franchisee's obligations to indemnify the Franchisor and/or an Affiliate for any Claims or Damages pursuant to Section 17.4 of this Agreement;
- (f) any injunctive actions commenced by either party pursuant to this Agreement or pursuant to any statutory or common law rights; and
- (g) the matters set forth in Section 26.5 (Franchisor's Rights and Remedies).
THE PARTIES AGREE THAT THE EXCLUSIVE VENUE FOR DISPUTES BETWEEN THEM UNDER THIS SECTION 22.4 SHALL BE IN FEDERAL OR STATE COURTS SITUATED IN CLEARWATER, FLORIDA AND EACH PARTY WAIVES ANY OBJECTION IT MIGHT HAVE TO THE PERSONAL JURISDICTION OF OR VENUE IN SUCH COURTS. NOTWITHSTANDING THE FOREGOING, IF FRANCHISOR'S PRINCIPAL PLACE OF BUSINESS IS NOT LOCATED IN THE CLEARWATER, FLORIDA METROPOLITAN AREA, THE NEAREST CITY TO FRANCHISOR'S PRINCIPAL PLACE OF BUSINESS AT THE TIME WITH A STATE AND FEDERAL COURT WILL BE SUBSTITUTED FOR CLEARWATER, FLORIDA IN FRANCHISOR'S SOLE DETERMINATION.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, disputes regarding data security, confidential information, trade secrets, and non-compete covenants are specifically excluded from mediation and arbitration. Instead, these types of disputes must be resolved in federal or state courts located in Clearwater, Florida. The agreement also stipulates that each party waives any objections to the personal jurisdiction or venue in those courts. However, if Southern Steer's principal place of business is not located in the Clearwater, Florida metropolitan area, the nearest city to Southern Steer's principal place of business with a state and federal court will be substituted for Clearwater, Florida at Southern Steer's sole discretion.
This means that if a Southern Steer franchisee has a disagreement with the franchisor related to these specific issues, they will not be able to pursue resolution through mediation or arbitration, which are often less formal and potentially less expensive methods of dispute resolution. Instead, the franchisee would have to engage in a formal court proceeding in Florida, or the substitute location determined by Southern Steer if applicable, which could increase legal costs and complexity. This could be a significant consideration for prospective franchisees, especially those located far from Florida or the substitute location.
It is important for potential Southern Steer franchisees to understand this clause and its implications. Litigation can be more expensive and time-consuming than mediation or arbitration. Franchisees should consider the potential costs and logistical challenges of litigating in the specified jurisdiction, as well as the potential impact on their business operations. Seeking legal counsel to fully understand the implications of this clause is advisable before entering into a franchise agreement with Southern Steer.