What is Holdings' relationship to Lefty's regarding the manufacturing of Proprietary Items for Floyds 99?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
purchase some or all of the items or services used in your Barbershop from us or our affiliates upon 30 days' written notice to you.
Other than Lefty's and Elevate, we are not currently affiliated with any designated or approved suppliers. Three of our officers are also officers of Holdings and Lefty's, but none of our officers own an interest in Lefty's, a wholly owned subsidiary of Holdings. Three of our officers own an interest in Holdings, the parent of Lefty's. Three of our officers also own minority interests in Elevate. FFL, on behalf of itself and its affiliates, reserves the right to sell products, equipment, supplies and services to franchisees and to derive revenue from such sales. Lefty's currently manufactures Proprietary Items for sale in the Barbershops and Elevate currently provides information technology services to franchisees. For the fiscal year ending December 31, 2024: (1) Lefty's revenues related to purchases of Proprietary Items by our franchisees was $722,268, or 33% of Lefty's total revenue of $1,956,463, and (2) Elevate's revenues from purchases made by our franchisees was $131,040, or 31% of Elevate's total revenue of $422,811. We estimate that the costs of your purchases from designated or approved sources, or according to our standards and specifications, may range from 50% to 75% of the total cost of establishing a FLOYD'S 99 Shop and approximately 5% to 15% of the total cost of operating a FLOYD'S 99 Shop after that time.
You shall not purchase or lease any inventory, equipment, supplies, or services we have not approved, or purchase or lease these items from a supplier we have not designated or approved. You must notify us and obtain our written approval in advance if you want to purchase or lease items from a supplier we have not designated or approved. The notification should include sufficient specifications, photographs, drawings and other information and samples to determine whether those items or those suppliers meet our specifications. You must reimburse us for the actual cost of any testing and the reasonable cost of investigation to determine whether those items or those suppliers meet our specifications. Other than suppliers or vendors who are our only approved or designated sources, we will not unreasonably withhold our approval of a supplier of your choosing if the supplier meets our published standards and specifications. We will notify you in writing within 30 days of receiving your request if we reject a proposed supplier. We reserve the right to change the published standards regarding any approved supplier or any inventory, equipment, supplies, or services used, offered for sale or leased by franchisees upon 30 days written notice to all franchisees and all approved suppliers. We may revoke our approval of a supplier on 30 days prior written notice.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 24–29)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, Lefty's manufactures Proprietary Items for sale in Floyds 99 Barbershops. Lefty's is identified as a wholly-owned subsidiary of Holdings. Three officers of Floyds 99 are also officers of Holdings and Lefty's; however, none of the Floyds 99 officers own an interest in Lefty's, but they do own an interest in Holdings, the parent of Lefty's.
For the fiscal year ending December 31, 2024, Lefty's revenues related to purchases of Proprietary Items by Floyds 99 franchisees was $722,268, which accounted for 33% of Lefty's total revenue of $1,956,463. Salon Innovations, Inc. (dba Pro47), which is unaffiliated with Floyds 99, is the designated supplier of the Proprietary Items manufactured by Lefty's.
Floyds 99 franchisees are required to purchase certain branded hair care products and other proprietary hair care accessories that Floyds 99 has developed, referred to as Proprietary Items, from designated or approved sources. Floyds 99 reserves the right to change or designate suppliers, including changing the suppliers to Floyds 99 or its affiliates, at its discretion in the future. Pro47 charges standard and customary prices for a professional hair care line selling directly to a volume purchasing group of salons and charges the same prices to franchised Barbershops as it charges to company and affiliate-owned Barbershops.
This arrangement means that a portion of the franchisee's expenses for Proprietary Items contributes to the revenue of Lefty's, a company under Holdings, in which Floyds 99 officers have an ownership stake. While Floyds 99 states that the formulations for Proprietary Items are maintained as trade secrets, prospective franchisees should consider the implications of purchasing required items from a supplier related to the franchisor and the potential for conflicts of interest.