Does the Floyds 99 non-compete agreement prevent a franchisee from being a consultant for a Competitive Business during the term?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
e of the Marks hereunder, the 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 the franchisees of the Franchisor using the Marks and Licensed Methods. Therefore, other than the FLOYD'S 99 Shop licensed herein or authorized by separate agreement with the Franchisor, neither the Franchisee nor any of the Franchisee'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.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, the non-compete agreement during the term of the franchise agreement prohibits a franchisee from performing services as a consultant for a Competitive Business. This restriction applies not only to the franchisee but also to their officers, directors, shareholders, principal managers, barbershop managers, equity owners, members, managers, partners, and their immediate families.
A "Competitive Business" is defined as any business that operates or grants franchises or licenses to others to operate 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. This definition is important for franchisees to understand, as it clarifies the scope of businesses they (and related parties) cannot be involved with during the term of their Floyds 99 franchise agreement.
However, there is an exception: franchisees are not prohibited from owning 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. This exception allows for minor, passive investments in publicly traded competitors. The non-compete aims to protect Floyds 99's Licensed Methods, operations, proprietary products, vendor lists, and marketing strategies, which the company considers valuable and integral to the franchise system.