What components does Floyds 99 include in the transaction prices within its franchise agreements?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2.4 Subsequent Franchise Agreements. The parties agree that a separate Franchise Agreement shall be executed by the parties to this Agreement for each FLOYD'S 99 Shop developed under this Agreement. The Franchise Agreement for the second and subsequent Barbershops will be executed within 10 days after Franchisor's approval of a location for each such Barbershop. Developer's failure to execute any additional Franchise Agreements or its default in any term of such Franchise Agreements may, at the option of Franchisor, be deemed a default under this Agreement and shall entitle Franchisor to terminate this Agreement as further provided in Article 4 below. Each Franchise Agreement to be executed by Developer for each Barbershop to be developed hereunder shall be in a form substantially similar to the Franchise Agreement being executed herewith, although Franchisor reserves the right to change provisions of the Franchise Agreement to conform with the then current Franchise Agreement being offered to new franchisees of Franchisor. Notwithstanding the foregoing, Franchisor agrees that it will not charge an initial franchise fee to Developer that is greater than the amounts set forth herein and will not increase the Royalty percentage to a rate that is greater than the rate charged to Developer in the Franchise Agreement being executed herewith. Developer acknowledges that Franchisor has the right, however, to charge then current published rates for advertising contributions and optional products and services offered to Developer in accordance with Franchisor's then current franchise disclosure document. The form of the Franchise Agreement attached as Exhibit IV and any future forms of Franchise Agreements referred to in this Section will also be included in the term "Franchise Agreement" as used in this Agreement.
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
Based on the 2025 Floyds 99 Franchise Disclosure Document, the franchise agreement for subsequent barbershops (beyond the first) will be executed within 10 days after Floyds 99 approves the location. While the agreement will be substantially similar to the initial one, Floyds 99 retains the right to modify provisions to align with the current franchise agreement offered to new franchisees.
Importantly, Floyds 99 assures that the initial franchise fee for these subsequent barbershops will not exceed the amount specified in the initial agreement. Similarly, the royalty percentage will not increase beyond the rate charged in the original franchise agreement.
However, Floyds 99 explicitly states that it reserves the right to charge the then-current published rates for advertising contributions and optional products and services. These rates would be in accordance with Floyds 99's current franchise disclosure document. This means that while the core franchise fee and royalty rate are protected, franchisees could see fluctuations in costs related to advertising and optional services as per the prevailing rates at the time of the transaction.