Is a Floyds 99 franchisee prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange?

According to the 2025 Floyds 99 Franchise Disclosure Document, a franchisee is generally restricted from having a direct or indirect controlling interest in a Competitive Business during the term of the agreement. A Competitive Business is defined as one that operates 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.

However, there is an exception to this restriction. A Floyds 99 franchisee is not prohibited from owning securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter, provided that the securities represent 5% or less of the outstanding securities of that class.

This exception allows franchisees to invest in publicly traded companies that may be considered competitors to Floyds 99, as long as the investment remains below a certain threshold. This provision balances the franchisor's need to protect its business interests with the franchisee's ability to diversify their investments.