Does the Floyds 99 franchisee need to agree to the Franchisor's delegation of duties?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
cribed in Section 20.3 of this Agreement.
- 20.5 Acknowledgement. If this Agreement is terminated by the Franchisor prior to its expiration as set forth in Sections 20.1 and 20.2 above, the Franchisee acknowledges and agrees that, in addition to all other available remedies, the Franchisor shall have the right to recover lost future royalties during any period in which the Franchisee fails to pay such royalties through and including the remainder of the then current term of this Agreement.
20.6 Management Rights.
- a. If Franchisor determines in its sole judgment that the operation of the Franchisee's FLOYD'S 99 Shop is not being conducted or managed properly, is not being operated by an individual who has successfully completed Franchisor's mandatory initial training program, or if a default occurs, then to prevent an interruption of the operation of Franchisee's FLOYD'S 99 Shop which would cause harm to the FLOYD'S 99 system and thereby lessen its value, Franchisee authorizes Franchisor to appoint an interim Principal Manager to operate and manage Franchisee's FLOYD'S 99 Shop for as long as Franchisor deems necessary and practical, and without waiver of any other rights or remedies which Franchisor may have under this Agreement ("Franchisor's Management Rights"). In Franchisor's sole judgment, Franchisor may deem Franchisee incapable of operating Franchisee's FLOYD'S 99 Shop if, without limitation, Franchisee is absent or incapacitated by reason of illness or death; Franchisee has failed to pay when due or has failed to remove any and all liens or encumbrances of every kind placed upon or against the Franchisee's FLOYD'S 99 Shop; or Franchisor determines that operational problems require that Franchisor appoint an interim Principal Manager to operate and manage Franchisee's FLOYD'S 99 Shop for a period of time that Franchisor determines, in its sole discretion, to be necessary to maintain the operation of the Franchisee's FLOYD'S 99 Shop as a going concern.
- b. Franchisor shall keep in a separate account all monies generated by the operation of the Franchisee's FLOYD'S 99 Shop, less the expenses of Franchisee's FLOYD'S 99 Shop, including reasonable compensation and expenses for Franchisor's representatives.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, a franchisee authorizes the Franchisor to appoint an interim Principal Manager to operate and manage the franchisee's shop under specific conditions. These conditions include instances where the Franchisor determines the shop is not being properly managed, is not being operated by someone who completed the initial training, or if a default occurs. This authorization is designed to prevent interruption of the shop's operation, which could harm the Floyds 99 system. This authorization by the franchisee is termed "Franchisor's Management Rights".
If Floyds 99 exercises these management rights, the franchisee must hold harmless the franchisor and its representatives for any actions that occur during this temporary operation. The franchisor will keep all monies generated by the shop in a separate account, deducting the shop's expenses and compensation for the franchisor's representatives. Additionally, Floyds 99 has the right to charge a reasonable management fee on top of royalties, national marketing contributions, and other amounts already payable under the agreement during the period their appointed Principal Manager is managing the shop.
This clause ensures that Floyds 99 can maintain the operational standards and protect the brand's reputation even if a franchisee is unable to manage their shop effectively. However, the franchisee bears the financial responsibility for the franchisor's intervention, including management fees and potential losses, although the franchisor is only obligated to use its best efforts and is not liable for debts, losses, or obligations incurred during this period.
This type of clause is relatively common in franchising, allowing franchisors to step in and protect their brand. However, prospective Floyds 99 franchisees should carefully consider the circumstances under which the franchisor can exercise these rights and the potential financial implications.