Does the Floyds 99 non-compete agreement prevent a franchisee from being an employee 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 agreement prohibits a franchisee (or their officers, directors, shareholders, principal managers, barbershop managers, equity owners, members, managers, partners, or immediate family members) from performing services as an employee for a Competitive Business. A Competitive Business is defined as any business operating or franchising 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.
This restriction means that during the term of the Franchise Agreement, a Floyds 99 franchisee cannot work for another hair care business that meets the definition of a Competitive Business. This is a fairly standard restriction in franchising, intended to protect the Floyds 99 brand and its proprietary methods.
However, the franchisee is not prohibited from owning securities in a Competitive Business if the 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 passive investments in publicly traded companies that might be considered competitive.
Prospective franchisees should carefully consider this non-compete clause and ensure they are not in violation of it, or planning to be, during the term of their Franchise Agreement. Violation of this clause could lead to legal action from Floyds 99.