Under the Southern Steer Multi-Unit Development Agreement, what constitutes a 'Controlled Entity'?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, the following words will have the following definitions:
- Controlled Entity. "Controlled Entity" will mean an Entity in which (a) the Multi-Unit Developer is the Owner of at least 51% of the Ownership Interests in the Entity; or (b) the Multi-Unit Developer 's Owners are the Owners of at least 51% of the Ownership Interests in the Entity.
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, a 'Controlled Entity' is defined within the context of the Multi-Unit Development Agreement. This agreement allows a Multi-Unit Developer to open multiple Southern Steer businesses within a specific territory. The 'Controlled Entity' provision allows the Multi-Unit Developer to operate these franchises through a separate business entity rather than directly.
Specifically, a 'Controlled Entity' is defined as a business entity where either (a) the Multi-Unit Developer owns at least 51% of the ownership interests, or (b) the Multi-Unit Developer's owners collectively own at least 51% of the ownership interests in the entity. This ensures that the Multi-Unit Developer maintains significant control over the operations of the Southern Steer franchises even if they are not directly managed by the developer.
This structure has implications for both Southern Steer and the Multi-Unit Developer. Southern Steer ensures that the controlling party has sufficient stake in the business. The Multi-Unit Developer can distribute ownership and potentially raise capital while retaining ultimate control and responsibility for meeting the obligations under the Multi-Unit Development Agreement and individual Franchise Agreements.