Does the Floyds 99 franchise agreement include a covenant not to compete during the term of the agreement?
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.
The term "Competitive Business" as used in this Agreement shall mean any business operating or granting franchises or licenses to others to operate, either (i) a retail hair care business deriving more than 5% of its gross sales from the sale of haircuts or hair care products; or (ii) a wholesale business deriving more than 5% of its gross sales from the sale of hair care products.
Notwithstanding the foregoing, the Franchisee shall not be prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-thecounter market and represent 5% or less of that class of securities issued and outstanding.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, the franchise agreement includes a non-competition covenant during the term of the agreement. This means that while operating a Floyds 99 franchise, the franchisee is restricted from engaging in any competitive business activities, other than the Floyds 99 shop licensed in the agreement or authorized by a separate agreement with the franchisor.
The agreement specifies that neither the franchisee, nor their officers, directors, shareholders, principal managers, barbershop managers, equity owners, members, managers, partners, or any member of their immediate families, can have a direct or indirect controlling interest in a Competitive Business. They are also prohibited from performing services for a Competitive Business as a director, officer, manager, employee, consultant, representative, or agent. Furthermore, franchisees are barred from diverting or attempting to divert business or employees from the Floyds 99 shop, the franchisor's business, or any other Floyds 99 franchisee's business to a Competitive Business.
The term "Competitive Business" is defined as any business operating or granting franchises or licenses to others to operate either 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 the sale of hair care products. However, the franchisee is not prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent 5% or less of that class of securities issued and outstanding.
These restrictions are in place to protect Floyds 99's licensed methods, operations, proprietary products, vendor lists, marketing, advertising, and related information, which the franchisor considers commercially valuable and essential to the brand's success. This is a fairly standard practice in franchising to protect the brand and prevent franchisees from using the franchisor's confidential information to compete against the system.