Does the Floyds 99 non-compete agreement apply to members of the developer?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
business relationship (whether with an employee, principal, banker, or otherwise) with a person who is added to the Annex. Developer certifies that it has no knowledge or information that, if generally known, would result in Developer or its principals, its employees, or anyone else associated with Developer to be listed in the Annex. Developer understands that it is solely responsible for ascertaining what actions it must take to comply with the Anti-Terrorism Laws. Any misrepresentation by Developer under this Section or any violation of the Anti-Terrorism Laws by Developer, its principals, its employees, or their respective affiliates shall constitute grounds for immediate termination of this Agreement, and any other Agreement Developer has entered into with Franchisor or one of Franchisor's affiliates.
11. RESTRICTIVE COVENANTS
- 11.1 Non-Competition During Term. Developer acknowledges that, in addition to the training provided pursuant to this Agreement and the Franchise Agreements and the license of the Marks under the Franchise Agreements, 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 Developers and franchisees of Franchisor using the Marks and Licensed Methods. Therefore, other than the FLOYD'S 99 Shop(s) authorized by separate agreement(s) with Franchisor, neither Developer nor any of Developer'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) divert or attempt to divert any business related to, or any client or account of any FLOYD'S 99 Shop, Franchisor's business or any other FLOYD'S 99 Developer's business, by direct inducement or otherwise, or divert or attempt to divert the employment of any employee of Franchisor, another developer or another franchisee licensed by Franchisor to use the Marks and Licensed Methods, to any Competitive Business by any direct inducement or otherwise.
The term "Competitive Business" as used in this Agreement shall mean any business operating or granting franchises or licenses to others to operate, either (i) a retail hair 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, Developer 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-the-counter market and represent 5% or less of that class of securities issued and outstanding.
11.2 Post-Termination Covenant Not to Compete.
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, the non-compete agreement applies to the developer and certain related parties. During the term of the Development Agreement, neither the Developer nor any of the Developer's officers, directors, shareholders, Principal Managers, Barbershop managers, equity owners, members, managers or partners, nor any member of his or their immediate families, can have a direct or indirect controlling interest in a Competitive Business, perform services for a Competitive Business, or divert business or employees from Floyds 99. A Competitive Business is defined as 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. Owning less than 5% of securities in a Competitive Business that are listed on a stock exchange or traded over-the-counter is permitted.
Post-termination, for a period of two years, the non-compete extends to the Developer and its officers, directors, shareholders, Principal Managers, members, managers and/or partners, preventing them from having any direct or indirect interest in a Competitive Business within a 25-mile radius of the Franchised Location, any other franchised Floyds 99 Shop, or any Floyds 99 Shop owned by the Franchisor or its affiliates. Similar to the during-term restriction, owning less than 5% of publicly traded securities in a Competitive Business is allowed.
These restrictions ensure that the Developer and related parties do not use the knowledge and resources gained from Floyds 99 to compete against the franchise system, protecting the brand and its franchisees. Prospective developers should carefully consider these restrictions and how they might impact their future business activities and those of their associated parties.