What constitutes a material breach of the Development Agreement for a Floyds 99 developer?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
"Development Fee" of $49,500 for each of the first and second FLOYD'S 99 Shops to be developed hereunder, plus $34,500 for each of the remaining Barbershops to be developed. Developer agrees that Franchisor has fully earned the Development Fee upon receipt and acknowledges that the Development Fee represents payment for the grant of the development rights, administrative and other expenses and for development opportunities lost or deferred as a result of the Development Area granted to Developer under this Agreement. All fees hereunder are nonrefundable once paid to Franchisor and under no circumstances will Developer be entitled to a refund, return or rebate of any portion of initial franchise fees or Development Fees paid hereunder.
5. DEVELOPMENT OBLIGATIONS
- 5.1 Development Schedule. Acknowledging that time is of the essence, Developer agrees to exercise its development rights according to the development schedule set forth on Exhibit I to this Agreement (the "Development Schedule") and as otherwise set forth herein. Developer must construct, open and maintain in continuous operation a minimum number of FLOYD'S 99 Shops in the Development Area within the time periods mandated by the Development Schedule. Developer's failure to adhere to the Development Schedule (including any extensions approved by Franchisor in writing) will constitute a material breach of this Agreement.
- 5.2 Effect of Failure. Strict compliance with the Development Schedule is of the essence. If Developer fails to construct and open any FLOYD'S 99 Shop or maintain the cumulative number of FLOYD'S 99 Shops open and operating in accordance with the Development Schedule, then Developer will be in default. Any such default constitutes a material breach of this Agreement and Franchisor may, in Franchisor's sole discretion, elect to:
- (a) terminate this Agreement;
- (b) operate or grant franchises to others to operate FLOYD'S 99 Shops within the Development Area;
- (c) grant Developer, upon Developer's reasonable request, up to two (2) extensions of the Development Schedule, each for a period of six (6) months. If Franchisor agrees to provide any extensions, the first extension will be provided at no charge and the second extension, if also provided, will be subject to Developer's payment of a non-refundable $5,000 extension fee; or
- (d) reduce the Development Area and the Development Schedule to a size and magnitude that Franchisor estimates Developer is capable of operating otherwise in accordance with this Agreement.
Any extensions of the time periods to open the Barbershops are subject to Franchisor's extension policy, which may change from time to time and may require Developer to pay additional fees to Franchisor.
5.3 Site Selection. Developer shall not, without the prior written approval of Franchisor, enter into any contract for the purchase or lease of any premises for use as a FLOYD'S 99 Shop.
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, a material breach of the Development Agreement occurs if the developer fails to adhere to the Development Schedule. This schedule, outlined in Exhibit I of the agreement, mandates the construction, opening, and continuous operation of a minimum number of Floyds 99 shops within specific timeframes in the designated Development Area.
Strict compliance with the Development Schedule is critical. If a developer fails to construct and open shops or maintain the required cumulative number of operating shops as per the schedule, it constitutes a default and a material breach. In such cases, Floyds 99 has the discretion to terminate the agreement, operate or franchise others within the Development Area, grant up to two extensions (with a $5,000 fee for the second extension), or reduce the Development Area and Schedule to a manageable size.
Additionally, Floyds 99 can terminate the agreement if the developer makes any material misrepresentation or omission when purchasing the development rights, fails to maintain the minimum number of barbershops, is convicted of a felony or a crime involving moral turpitude, fails to pay amounts owed to Floyds 99 or its affiliates, surrenders control of the agreement without written consent, engages in dishonest or unethical conduct that may adversely affect the reputation of Floyds 99, makes an unauthorized assignment of the agreement, or fails to assign interests as required in the event of death or disability.