How does Floyds 99 define 'transfer' in the context of the Development Agreement?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| Agreement or other agreements, notice of termination of Franchise Agreement delivered to Developer by Franchisor or Developer terminates a Franchise Agreement without cause. | |||
| i. | Franchisee's obligations on termination / nonrenewal | Section 9.3 | Loss of development rights, cease use of Marks and confidential information except in connection with Barbershops currently operating; covenant not to compete. |
| j. | Assignment of contract by franchisor | Section 8.6 | No restriction on our right to assign. |
| k. | "Transfer" by franchisee – definition | Sections 8.1 and 8.5 | Includes transfer of interest in Development Agreement, or in the franchisee entity. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–49)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, a 'transfer' by the franchisee, in the context of the Development Agreement, includes the transfer of interest in the Development Agreement itself or in the franchisee entity. This definition is important for prospective developers as it clarifies that any change in ownership or control, whether of the agreement or the business entity holding the agreement, is considered a transfer.
This broad definition has significant implications. A franchisee needs to seek approval from Floyds 99 for various ownership changes, not just a direct sale of the Development Agreement. For example, if the franchisee is a corporation or LLC, the sale of stock or membership interests that results in a change of control would also be considered a transfer. This ensures that Floyds 99 maintains control over who is developing their franchise locations.
The requirement for franchisor approval gives Floyds 99 the ability to vet potential new owners or partners. Floyds 99 can ensure that anyone taking over a Development Agreement meets their standards for financial stability, business acumen, and commitment to the brand. This protects the integrity of the Floyds 99 brand and the interests of other franchisees. The FDD outlines further conditions for franchisor approval of a transfer in Sections 8.2 and 8.3 of the Development Agreement, including providing notice, ensuring the transferee qualifies, paying all outstanding amounts, paying a transfer fee, signing the then-current contract, and signing a general release and noncompetition covenant.