Does the Floyds 99 non-compete agreement prevent a franchisee from being a manager 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 Floyds 99's 2025 Franchise Disclosure Document, the non-compete agreement during the term of the franchise 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 a manager for a Competitive Business. A Competitive Business is defined as any business operating or granting 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 restriction means that during the term of the Franchise Agreement, a Floyds 99 franchisee cannot be employed as a manager 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 system and prevent franchisees from using the franchisor's confidential information and methods to benefit a competitor.
However, the franchisee is not 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. This exception allows franchisees to make passive investments in publicly traded companies that might be considered competitors, as long as the investment remains below a certain threshold.