Does the Floyds 99 franchise agreement contain restrictive covenants?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
22. RESTRICTIVE COVENANTS
- 22.1 Non-Competition During Term.
The Franchisee acknowledges that, in addition to the training provided pursuant to this Agreement and the license of the Marks hereunder, the Franchisor has also licensed commercially valuable information which comprises and is a part of the Licensed Methods, including without limitation, operations, proprietary products, proprietary product formulas, vendor lists, marketing, advertising and related information and materials and that the value of this information derives not only from the time, effort and money which went into its compilation, but from the usage of the same by all the franchisees of the Franchisor using the Marks and Licensed Methods.
Therefore, other than the FLOYD'S 99 Shop licensed herein or authorized by separate agreement with the Franchisor, neither the Franchisee nor any of the Franchisee's officers, directors, shareholders, Principal Managers, Barbershop managers, equity owners, members, managers or partners, nor any member of his or their immediate families, shall during the term of this Agreement:
a. have any direct or indirect controlling interest as a disclosed or beneficial owner in a "Competitive Business" as defined below;
b. perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business; or
c. divert or attempt to divert any business related to, or any client or account of the FLOYD'S 99 Shop, the Franchisor's business or any other FLOYD'S 99 franchisee's business, by direct inducement or otherwise, or divert or attempt to divert the employment of any employee of the Franchisor or another franchisee licensed by the Franchisor to use the Marks and Licensed Methods, to any Competitive Business by any direct inducement or otherwise.
d.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
Yes, according to the 2025 Floyds 99 Franchise Disclosure Document, the franchise agreement contains restrictive covenants. Specifically, during the term of the agreement, the franchisee and related parties are restricted from involvement in any Competitive Business other than the licensed Floyds 99 shop or as authorized by a separate agreement with Floyds 99. This includes owning a controlling interest in, performing services for, or diverting business or employees to a Competitive Business.
These restrictions apply not only to the franchisee but also to their officers, directors, shareholders, principal managers, barbershop managers, equity owners, members, managers, partners, and their immediate families. This broad scope ensures that individuals closely associated with the franchisee are also prevented from engaging in competitive activities that could harm the Floyds 99 brand.
The definition of "Competitive Business" or the specific activities that would be considered a breach of these covenants are not detailed in this section, but prospective franchisees should seek clarification from Floyds 99 regarding the scope and limitations of these restrictive covenants to fully understand their obligations and potential restrictions during the franchise term. Understanding these restrictions is crucial for franchisees to avoid unintentional breaches of the agreement and to plan their business activities accordingly.