What limitation is placed on the company's business activity when an individual transfers their Floyds 99 franchise to a controlled corporation?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisee acknowledges that the Franchisor's right to approve or disapprove of a proposed sale or transfer, and all other requirements and rights related to such proposed sale or transfer, as provided for above, shall apply (1) if the Franchisee is a partnership or other business association, to the addition or deletion of a partner or members of the association or the transfer of any partnership or membership among existing partners or members; (2) if the Franchisee is a corporation or limited liability company, to any proposed transfer or assignment of 25% or more of the ownership interests of the Franchisee, whether such transfer occurs in a single transaction or several transactions; and (3) if the Franchisee is an individual, to the transfer from such individual or individuals to a corporation or limited liability company controlled by them, in which case the Franchisor's approval will be conditioned upon: (i) the continuing personal guarantee of the individual (or individuals) for the performance of obligations under this Agreement; (ii) the issuance and/or transfer of ownership interests which would affect a change in ownership of 25% or more of the stock or membership units in the company being conditioned on the Franchisor's prior written approval; (iii) a limitation on the company's business activity to that of operating the FLOYD'S 99 Shop and related activities; and (iv) other reasonable conditions.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, if a franchisee who is an individual transfers their franchise to a corporation or limited liability company they control, the company's business activity is limited to operating the Floyds 99 shop and related activities. This means the corporation or LLC can only engage in activities directly related to running the barbershop.
This restriction ensures that the business focuses solely on the Floyds 99 franchise and doesn't diversify into other ventures. This protects the brand's consistency and reputation, as the entity is contractually obligated to dedicate itself to the Floyds 99 business model.
For a prospective franchisee, this condition means that if they choose to incorporate their Floyds 99 franchise, the corporation's activities must remain exclusively within the scope of the franchise agreement. The franchisee should carefully consider this limitation, especially if they have plans for other business ventures through the same corporate entity.