Is a Floyds 99 developer prohibited from owning securities in a Competitive Business if those securities are publicly traded and represent 5% or less of the outstanding shares?

According to the 2025 Floyds 99 Franchise Disclosure Document, a developer is not prohibited from owning securities in a Competitive Business under certain conditions. A "Competitive Business" is defined as any business operating or franchising 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 hair care products.

However, this restriction does not apply if the securities are listed on a stock exchange or traded over-the-counter, and if they represent 5% or less of the outstanding shares of that class of securities. This exception allows a Floyds 99 developer to make minor investments in publicly traded competitor companies without violating the non-competition agreement.

This provision balances the franchisor's need to protect its business interests with the franchisee's ability to make independent investment decisions. It is a fairly standard clause in franchise agreements, allowing franchisees some flexibility in their investment portfolios while preventing them from having a significant controlling interest in competing businesses.