Does the Floyds 99 franchise agreement include a post-termination covenant not to compete?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 22.2 Post-Termination Covenant Not to Compete.
Upon termination or expiration of this Agreement for any reason, the Franchisee and its officers, directors, shareholders, Principal Managers, members, managers and/or partners agree that, for a period of two years commencing on the effective date of termination or expiration, or the date on which the Franchisee ceases to conduct business, whichever is later, neither Franchisee nor its officers, directors, shareholders, Principal Managers, members, managers and/or partners shall have any direct or indirect interest (through a member of any immediate family of the Franchisee or its owners or otherwise) as a disclosed or beneficial owner, investor, partner, director, officer, manager, employee, consultant, representative or agent or in any other capacity in any Competitive Business, defined in Section 22.1 above, located or operating within a 25 mile radius of the Franchised Location, within 25 miles of the Franchised Location of any other franchised FLOYD'S 99 Shop or, within 25 miles of the premises of any FLOYD'S 99 Shop owned by the Franchisor or affiliate of the Franchisor.
The restrictions of this Section shall not be applicable to the ownership of shares of a class of securities listed on a stock exchange or traded on the over-the-counter market that represent 5% or less of the number of shares of that class of securities issued and outstanding.
The Franchisee and its officers, directors, shareholders, Principal Managers, members, managers and/or partners acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting such skills.
Consequently,
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 includes a post-termination covenant not to compete. Upon termination or expiration of the agreement, the franchisee, along with their officers, directors, shareholders, principal managers, members, managers, and partners, are restricted from having any direct or indirect interest in a Competitive Business for two years. This restriction begins on the effective date of termination or expiration, or the date the franchisee ceases to conduct business, whichever is later.
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. The non-compete area extends to a 25-mile radius of the former Floyds 99 shop location, any other franchised Floyds 99 shop, or any Floyds 99 shop owned by the franchisor or its affiliates.
This restriction does not apply to owning securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of the outstanding securities. This post-termination covenant acknowledges that the franchisee possesses general skills and abilities and has other opportunities to use those skills. This clause aims to protect Floyds 99's market and proprietary information after a franchise agreement ends.