What constitutes a 'Competitive Business' for Floyds 99 according to the agreement?

According to the 2025 Floyds 99 Franchise Disclosure Document, a 'Competitive Business' is defined as any business that operates or grants franchises or licenses to others to operate either a retail hair care business deriving more than 5% of its gross sales from haircuts or hair care products, or a wholesale business deriving more than 5% of its gross sales from the sale of hair care products. This definition is crucial because it restricts the franchisee's involvement in similar businesses during the term of the agreement.

However, there is an exception to this restriction. A Floyds 99 franchisee is not prohibited from owning securities in a Competitive Business if these securities are listed on a stock exchange or traded over-the-counter, provided that they represent 5% or less of the outstanding securities of that class. This allows franchisees to make minor investments in publicly traded competitor companies without violating the agreement.

These restrictions extend beyond just the franchisee. The definition includes the franchisee's officers, directors, shareholders, principal managers, members, managers, and partners, as well as their immediate families. This broad scope ensures that those associated with the franchisee cannot circumvent the non-compete clause by operating a competing business through a related party. Understanding this definition is critical for prospective franchisees to avoid potential breaches of contract and legal ramifications.