Is a Floyds 99 franchisee prohibited from being a consultant for a Competitive Business during the term of the agreement?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
e 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.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, franchisees are restricted from certain activities related to competitive businesses during the term of their agreement. Specifically, 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 perform services as a consultant for a Competitive Business. A 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.
This restriction prevents a Floyds 99 franchisee from actively supporting or being involved in a competing hair care business while they are operating their Floyds 99 franchise. This measure aims to protect Floyds 99's licensed methods, operations, proprietary products, vendor lists, and marketing strategies, which the franchisor considers valuable and integral to the brand's success. The FDD emphasizes that the value of this information comes from the time, effort, and money invested in its creation and from its consistent use across all Floyds 99 franchise locations.
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. This exception allows franchisees to make minor investments in publicly traded competitor companies without violating the non-competition terms. This non-compete agreement is designed to ensure that franchisees remain fully committed to the Floyds 99 system during the term of their agreement, preventing them from using the franchisor's confidential information and resources to benefit a competing business.