Is a Floyds 99 franchisee prohibited from being a consultant for a Competitive Business after the termination of the agreement?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
ir 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.
- 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.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, a franchisee is restricted from engaging with a Competitive Business after the termination or expiration of their franchise agreement. Specifically, for a period of two years after termination or ceasing business operations, the franchisee (including their officers, directors, shareholders, Principal Managers, members, managers, and/or partners) cannot be involved in any capacity—whether as an owner, investor, partner, director, officer, manager, employee, consultant, representative, or agent—with a Competitive Business.
A Competitive Business is defined as one that operates or franchises 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 product sales. This restriction applies within a 25-mile radius of the former Floyds 99 location, any other franchised Floyds 99 Shop, or any Floyds 99 Shop owned by the franchisor or its affiliates.
This post-termination covenant aims to protect Floyds 99's business interests by preventing former franchisees from using the brand's confidential information and established goodwill to compete against the franchise system. However, there is an exception: franchisees are allowed to own 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.