Does the Floyds 99 development agreement define 'Competitive Business'?

According to the 2025 Floyds 99 Franchise Disclosure Document, the development agreement does define the term "Competitive Business." The agreement specifies that a "Competitive Business" is any business that operates or franchises retail hair care services, deriving more than 5% of its gross sales from haircuts or hair care products. It also includes wholesale businesses that derive more than 5% of their gross sales from hair care products.

This definition is relevant to the non-compete clauses within the development agreement. During the term of the agreement, the developer is restricted from having a controlling interest in or performing services for a "Competitive Business," other than the Floyds 99 shops authorized by the agreement. This prevents developers from directly competing with the Floyds 99 franchise system using the franchisor's licensed methods and marks.

After the termination or expiration of the development agreement, the developer is subject to a post-termination covenant not to compete for two years. This prevents the developer from engaging in a "Competitive Business" within a 25-mile radius of any Floyds 99 shop. However, there is an exception: the developer can own securities in a Competitive Business if the securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of the outstanding securities.

These restrictions are designed to protect Floyds 99's market share, trade secrets, and franchise system. Prospective developers should carefully consider these non-compete obligations, as they could limit their business activities during and after the term of the development agreement. It is important to understand the scope and duration of these restrictions and how they might impact future business opportunities.